Accounting is important for recording and analysing the financial or accounting transactions of the business firm. Efficient business accounting can bring new customers, improve your customer base, increase your budget, and be beneficial to the current employees. But all the accounting types are not suitable for all organizations and industries. You need to know different types of accounting if you are going to make a good career in accounting that you can apply in accordance with the businesses and industry.
There are many types of accounting that vary from auditing to preparing tax returns. Normally accountants prefer to specialize in one of these areas. Various types of accounting careers are there within the industry and all of them performing different kinds of activities. This blog will break down different types of accounting, the importance, and important objectives of accounting, career opportunities available for those who are interested in accounting.
There are mainly 13 types of accounting that accounts can specialize in based on their career goals and interests.
1.Managerial Accounting
In managerial accounting, it is preparing reports about the company’s business operations that management in taking business decisions. It is the process of identifying, monitoring, analysing, and interpreting, and providing information to the managers in accordance with the requirements. These financial statements help in formulating the financial plan of a business organization. Management accounts help the managers to plan and make decisions for the business and monitor if their plans and decisions are in the right way.
2.Cost Accounting
In managerial accounting, it is preparing reports about the company’s business operations that management in taking business decisions. It is the process of identifying, monitoring, analysing, and interpreting, and providing information to the managers in accordance with the requirements. These financial statements help in formulating the financial plan of a business organization. Management accounts help the managers to plan and make decisions for the business and monitor if their plans and decisions are in the right way.
3.Financial Accounting
Financial Accounting is concerned with recording, summarizing, reporting a business organization’s financial transactions by preparing financial statements. All the business monetary transactions are recording in the financial statements in a particular period of time. Hence recording these financial transactions helps in understanding the business organization’s operating health. Financial statements are preparing to provide information to the management of a business for planning, monitoring, performance analysis, and decision making. It also helps in meeting regulatory needs.
4.Tax Accounting
Tax accounting is concerned with the methods used to prepare tax returns and other statements required for tax compliance. A tax accountant is accountable for helping the business organization with income tax and financial statements. They help the business organization in planning future tax returns, such as recognizing the applications of specific tax decisions and minimizing certain tax burdens. Tax accounting deals with the transactions which have an effect on the tax situation of a business organization.
5.Accounting Information Systems (AIS)
Accounting information systems (AIS) oversee the improvement of effective and successful accounting procedures. It’s an information system that business organizations utilizing to collect, store, manage, and process financial and accounting data. These financial data can be used by analysts, managers, accounts, decision-makers, auditors. An accounting information system is normally a computer-based system for monitoring accounting activities and making decisions in conjunction with the information technology department.
6.Auditing
Auditing is the process of inspecting different books of accounts of a business organization by an auditor. It helps in ensuring the accuracy of the financial statements of a business. Mainly there are three kinds of auditing which are as follows
a) Internal Audit
The internal audit examines the business organizations like its financial processes and corporate governance. It’s a department within the business organization that is responsible for ensuring the firm has the potential to survive in the competitive market by reviewing and analysing the risk and control of the business and monitoring the company’s compliance with the laws and regulations and keep accurate financial records.
b) External Audit
The external audit is the process of examining financial statements prepared by the business organization. Normally there are various types of audits managed by external auditors contains operational audits, financial statement audits, compliance audits.
c) Internal Revenue Service Audit
Internal revenue audit also doing audits to ensure the accuracy of return of taxpayers and particular transactions
7.Fiduciary Accounting
Fiduciary accounting is the process of assigning an individual to perform all the business and financial accounts. They are responsible to handle all the accounts associated with real estate entities, investments, trust resources. They need to report financial information to their clients on the status of business entities, financial accounts, payments and receipts, incomes, and losses. Hence, they are submitting periodic financial reports to their clients within a particular period of time
8.Government Accounting
Government Accountants are planning and distributing funds or resources to the various departments based on their needs within the government. They need to record and oversee all the financial transactions incurred by local and state governments and they are also monitoring the budget of the governments. They are developing accounting procedures for governments following the standards prescribed by Governmental Accounting Standards Boards (GASB).
9.Fund Accounting
Fund Accounting is the process of maintaining records of management and distribution of funds of non-profit business organizations. They are collecting funds through tax, grants, donations, and other sources. Fund accounting helps in monitoring the funds allocated for various purposes and usage of that funds. The main purpose of fund accounting is concerned with accountability rather than profitability. Normally, different fund accounts are keeping for different nature of works. It also makes sure that the funds allocated are utilizing for the same work or project without any variation.
10.Forensic Accounting
Financial Accounting is the process of inspecting discovering financial crimes using various methods and techniques. Forensic accounts are monitoring financial information to know where the money has been lost and how can redeem it. They also need to submit the financial report of their findings and conclusions as proof when required. So, the financial accounts investigate financial crimes using their accounting knowledge while following the rules and standards prescribed under Generally Accepted Accounting Principles (GAAP). The main objective of forensic accounts is to collect all the financial data and record the transactions in the financial statements. These forensic professional accounts work on legal cases to report financial crimes to the courts.
11.Public Accounting
Public Accounting is concerned with the business that provides accounting services to other
business organizations based on their requirements. These accounts can provide services to
their clients like bookkeeping, auditing, tax-related services, preparation of financial statements,
consulting services. Public accountants provide financial information to their individual and
business firm clients
12.Project Accounting
Project Accounting refers to the process of preparing financial reports formulated to monitor the financial progress of the project which is useful for the managers for the betterment of project management. Project Accounting is a system that helps to monitor and report project-related transactions, estimating the cost to complete the project, income in return on projects, and funds allocated to the project. They need to continuously measure the performance of the project and communicate with management if the project is in the right way or not. Project accounts are responsible for tracking the progress and performance of the project, estimating the expenses, recognizing if there are any variations. Hence professional accountants manage all the financial aspects of the project including invoicing, confirming expenses, planning and managing budgets, preparing financial reports on the project, monitoring the time spent on the project, and managing assets of the project.
13.Investment Accounting
The main duty of an investment accountant is to manage the investments while following state rules and regulations. These professional accounts may have sound knowledge about stocks, bonds, and other investments. Investment accountants often work in asset management and brokerage business organization. They also can help the business firm in formulating its financial strategy. Investment accounting mainly depends on the objective of the investor and the amount of funds invested.
Accounting is concerned with collecting and classifying financial records and convert them into useful information systematically. Hence it is helpful in preparing financial statements including income statements, balance sheets, cash flow statements. Besides, there are some other financial reports that can be prepared by using the collected information. It helps the business firm in assessing the profit and loss for and estimating the assets and liabilities for a particular period of time.
Accounting information can be used to determine the performance and financial status of a business organization by comparing current financial statements with prior period statements so that the business firm can take remedial actions if there is any deviation to improve the performance. It also assists in planning and decision-making by the business organization. There are different types of accounting based on the activities, responsibilities, and some other factors.
To Know more about the features of Free Accounting software click here.
