Introduction to Accounting
Accounting is the process of recording and measuring data which provides the financial as well as non-financial information about the enterprises and many types of accounting are bifurcated according to the needs of the user for better results as well to ensure the financial position of the enterprises.
Accounting is the key function of every business organization to analyze, summarise, and reporting the transaction to control the regulators and other involved entities. As technological development, as well as economic or industrial development, has emerged it enhances the scope of accounting in the new business era. It has an important role in every business organization with different perspectives and transactions. Numerous types of accounting range from preparation of tax returns to auditing. As there are different sectors of business in the market so there are different accounting methods to evaluate them according to the needs. The software of accounting may differ according to the needs of the user. Hence there are different types of accounting such as Public Accounting, Financial Accounting, Forensic accounting, government accounting, Tax accounting, Management accounting, Internal auditing, etc.
Types of Accounting
Following are the types of Accounting-
1. Financial Accounting
This accounting is also termed as financial reporting as it is the procedure of generating financial information for internal as well as external use in the form of financial statements. The financial statements of every company reflect its past performance and present situation according to accounting standards specified by the authority. The process of financial accounting involves certain accounting conventions and rules and regulations which are supposed to implement by the accountant of the company in preparation of financial statements.
2. Management Accounting
This accounting is majorly focused on the management of the company. It is primarily made for internal use by the management of an organization and provided information shall be more detailed than the information needed for the external use. This accounting helps in enabling effective control and the fulfilment of the strategies made for the development of the company. Generally, this accounting includes forecasting and budgeting of the projects for better results and profit maximization in the company with the effective utilization of resources available in the company. It also includes the report of past performance and its result. This accounting is mostly used by the corporates to deal with its management while implementing new budgets and future policies.
3. Public Accounting
It is also known as Government accounting and it refers to the accounting which is used in the public sector at large. Government accounting is necessary for the public companies because it has different objectives according to state or central government and privately owned institutions. Public accounting ensures the financial structure of the government as well as public sector companies with the budgeted system provided under some money constraints. This accounting shows the financial position of the public sector companies and shows the comparative analysis of past performance with the current performance.
4. Tax Accounting
This is the type of accounting that is related to the matters of taxation. It is governed by the jurisdiction of tax laws and prescribed rules and regulations. The taxation rules are varying from the GAAP rules to support the differences. Tax accountants are generally prepared the financial statements according to prescribed accounting regulations concerning taxation laws. The information from this accounting is beneficial for the tax professionals to analyze the tax planning and estimate the tax liability of the entities with tax implications added thereon.
5. Forensic Accounting
It is a different kind of accounting which is related to some investigation techniques. These professionals are known as the Sherlock Holmes of the accounting world. They use an authentic way of accounting by investigation and auditing in cases of litigation or accounting fraud or disputes related to laws and regulations. The accountants of forensic accounting considered experts in matters involving litigations or financial frauds.
6. Project Accounting
Project Accounting is an important constituent of project management. Accounting of these projects is done through the accounting system in which there is a track of the financial progress of a project via frequent financial reporting. It is a specialized branch of accounting and it provides a competitive edge to the projects of the company. For project-oriented business it the must accounting system as it provides good results.
7. Social Accounting
It is also called as Sustainability and Corporate Social Responsibility Reporting. It is the process of analysing the implication of ecological and social environment factors that are related to the company. It is the form of reporting in which environmental reports are prepared to be accompanying the annual accounting reports of the companies.
It refers to the process of accounting which deals with corporate social responsibility and other environmental factors that are constituting the company and evaluation of external environment factors that are necessary to report to keep the track record of the changes with the past reports. However, this accounting is new in the business era but is considered to be implemented for good corporate governance. It is considered as the growing environmental consciousness between the society at large.
Accounting is a dynamic and vast profession that is crucial to implemented by the companies according to the needs. There are kinds of Accounting which are specific to the need of the users. Accounting is mandatory in every single organization to record the financial as well as non-financial information which is useful for the management as well as the outsiders of the company. The concept of different accounting enhances the scope of accounting in every field as specific accounting platform are there to implement according to the nature of business and its demand for business activities. It is the process of collecting information and analyzing them to record in a numeric sequence so that it would be easy to understand the reports prepared by the accountants or auditors. It is important to apply the accounting in the business to control the internal and external environment related to business.
This is a guide to Types of Accounting. Here we also discuss the introduction to accounting with types of which includes financial, management, etc. You may also have a look at the following articles to learn more –