If you are a beginner with accounting, you should start with the different If you are a beginner with accounting, you should begin with the various methods of accounting that people are using nowadays. These are the basics that you need to learn to move further in your future endeavors.
Types of accounting
- Public accounting
- Tax accounting
- Cost accounting
- Financial accounting
- Forensic accounting
- Management accounting.
Here’s a detailed study for each type –
These types of firms provide coverage to a large pool of clients. These clients can be manufacturers, NGOs, NPOs, government institutions, individuals, retail, etc. Public accounting means preparing and advising on tax, audits, consultation on preparation, and analyzing financial statements. These firms also act as the advisory bodies for acquisitions and mergers and internal audits.
Whereas FASB regulates the other types of accounting, the regulatory body is Internal Revenue Code (IRC) for tax accounting. This is precisely established for the NPOs, businesses, and single taxpayers to follow the tax regulations.
When you need to have information on the cost of starting a business, cost accounting comes into play. As Aron Govil mentions, this accounting calculates all the necessary expenses that a company will confront and then informs the management about the break-even point. These costs include labor, materials, maintenance, production, etc.
When you need to have an accurate report on financial statements, this type of accounting comes into play.
Tracking, recording, and reporting the financial transactions according to the FASB rules and guidelines are how you do this type of accounting. These guidelines exist to present a consistent report.
You use this type of accounting while investigating some business or individual. Police dept, banks, attorneys often use this accounting to examine transactions and to present a report. It is a fascinating combination of auditing, accounting, and investigating techniques.
There are several types of audits in existence.
- Investigative audit: This type of audit is the initial documental proof for building a criminal case with some suspicious findings.
- Tax audit: IRS generally conducts this type of audit to gather information on the legitimacy of the tax return.
- Compliance audit: This type of audit makes sure that a company is validating the rules and regulations through its policies or not.
- Financial audit: This is the most commonly used audit to present an accurate financial statement.
According to Aron Govil, this is the most globally used form of accounting. This is a crucial form of audit for the management to make informed decisions about the future of their business.
There are three significant types of management accounting. An organization shares this accounting information with the shareholders and other investors to let them know about their performance for a precise timeframe.
- Performance management.
- Strategic management.
- Risk management.
If you are a budding entrepreneur or management enthusiast, accounting knowledge will help you in more ways than you can imagine. Accounts are a vital part of any company or business. So get your hands on the basics of accounting today, and you will turn into a better decision-maker in every way.