There are different branches of accounting, each serving a different purpose. The various accounting system helps in gathering and maintaining the records in a proper manner so that those data can be used in various reports. It creates a system within the business with many inherent checks to highlight the mistake or fraud. Every accounting is used under different areas and there are multiple types of accounting that are present.
Most common types of accounting are –
Most Common Types of Accounting
The following are different types of accounting.
#1 – Financial Accounting
It involves the process of aggregation, compiling, and production of the financial information of the company usually in the form of the financial statements to be used by the stakeholders of the company. The various financial statements of the company include Balance Sheet, Profit and loss account, Cash flow statement and the statement of change in equity. Financial statements of the company are prepared by adhering to the principles which are led down in Generally Accepted Accounting Principles (GAAP).
#2 – Project Accounting
Project accounting is the accounting that is used by the company to track the progress of the different projects undergoing from the financial perspectives. It plays an important part in project management.
#3 – Managerial Accounting
It mainly focuses on accumulating the information to be used for the internal operational reporting i.e., it is mainly for the internal working of the company. It is more detailed than the information given to the external users of the company.
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#4 – Government Accounting
Government accounting mainly focuses on the financial administration of the Government’s activities for promoting welfare to the maximum level in the form of the various services given by the Government. Thus it is concerned mainly with the systematic recording of the income and expenditures of the offices of the Government.
#5 – Forensic Accounting
It involves the recording of various documents and making a report if any required in the course of an area which involves legal matters. In it, the accounting skills are being used to investigate the frauds and to do analysis on the financial statements which are to be used in the legal proceedings.
#6 – Tax Accounting
Accounting of the matters related to the tax comes under tax accounting. It involves compliance with various tax-related statutes along with the tax planning with the aim of preparation of tax returns. This process involves the calculation of income tax and various other taxes and their timely payment to the tax authorities.
#7 – Cost Accounting
Cost accounting is the accounting method that is used for capturing the various cost of production of the company by assessing these costs like input cost, fixed cost, etc. In the cost accounting, all the cost will first be assessed and then it will be compared with the actual cost incurred by the company in order to analyze the variance thereof. On the basis of the basis, the company can take corrective actions in a far better way.
Accounting means gathering of various records and arranging and recording them systematically so as they become useful data. This is done with the aim to prepare the three main statements which are income statement, balance sheet, and cash flow statement. Apart from this several other MIS reports as and when required are also prepared. It calculates the profit or loss of any business for a given period and nature & value of a company owner equity, assets, and liabilities.
Moreover, the accounting results can be compared with the previous year result to know the weak points of the business. It helps in decision-making activity to the management. This information can be produced as evidence in any legal matter. The items which are non-monetary are not recorded. Sometimes these are dressed so as to falsely show the true and fair view in the financial statement. It doesn’t account for the value of money and hence financial results are without giving weight age to a value of money.
This has been a guide to Types of Accounting. Here we discuss the different types of accounting with detailed explanation along with some examples. You can learn more about accounting from following articles –