Explore the different types of accounting to find what suits your requirements. It is an amalgamation of various accounting fields, accounting terminologies, and accounting systems. By understanding the different kinds, you would be in a better position to decide which suits and fits your business.
Understand the common links between the various accounting types with Brian C Jensen:
- Financial Accounting: As the name suggests, the prime use of financial accounting is recording transactions and making the final report. Financial statements are the basis for it, and there is a standardized guideline by Generally Accepted Accounting Principles (GAAP). Financial Accounting Standards Board (FASB) sets the rules for the GAAP. It helps in maintaining uniformity and minimizes discrepancies. The financial account focuses on past performance and not on future projections. Smaller companies and start-ups use cash accounting. But moderate scale to large scale companies prefers accrual accounting.
- Management Accounting: The accounts that support business management in decision making in management accounting. It is very different from financial accounting that gathers information from shareholders, investors, and other funding sectors. The information of management accounting is open to all. Its focus is the future and projection of financial decisions to support the management ultimately.
- Government Accounting: The government accounting rules are set by the Government Accounting Standards Board (GASB), which is like GAAP for bringing uniformity in all the different sectors of government accountancy. There is a significant difference between financial accounting and government accounting – the latter uses a separate funding track for income and expenses. The tracking method is accurate and uses general funds, permanent funds, special revenue, capital funds, and debt services.
- Public Accounting: Public accounting services support other clients in preparing the accounts. Manufacturing industries, service-providing companies, retailers, public sectors, individual firms, and non-profit organizations are few businesses dependent on public accounting. The focus is on tax policies, auditing, consultancy activities, financial statements, and forecast analysis. Other areas under the wind of public accountancy are mergers, acquisitions, business tactics, and internal account records. Suppose you are looking for more support from a public accounting company. In that case, you can ask for comprehensive bookkeeping services, financial guidance, payroll generation, and accounting management, which may or may not be computerized.
- Tax Accounting: The tax accounting rules are under the Internal Revenue Code (IRC) regulation. The rules ensure that all the current taxing rules are in sync with the businesses and individual taxpayers. The tax accountant is proficient in all the tax rules and accounting regulations. The bookkeeping includes an accurate calculation of tax, tax returns, various tax liabilities, and timely tax filing.
Other major accounting types include cost accounting, auditing, and forensic accounting. All the accounting has few standard features, few different and few interdependent ones. Like the wise Brian C Jensen has suggested, GAAP, IRC, or GASP all are governing bodies but ultimately all adhere to facts to get unfirm results. It means whether individual tax filing, preparing fortune 500 companies’ financial statements, or decision making through management accounting – the goal is factual.