Types of Accounting
Accounting is an essential part of your business. It helps you understand your business’s financial situation and plan for the future. But the truth is, there are many different types of accounting, and you might be wondering which will provide you the most benefit.
What are the Types of Accounting?
There are many types of accounting, including:
Financial Accounting
Financial accounting is an accounting that records, analyzes, and summarizes business financial transactions. Financial accountants create financial statements and provide information about your business’s economic health and performance to investors, customers, and creditors.
Responsibilities:
- Identifying financial transactions.
- Preparing financial statements.
- Preparing journal entries.
- Posting journal entries to the general ledger.
- Calculating the adjusted and unadjusted trial balance.
- Posting closing journal entries to close the books.
Management Accounting
Management accounting is similar to financial accounting but focuses on creating reports and giving financial information to business managers and internal team members. Management accountants analyze the company’s financial health to help the team make better financial decisions.
Responsibilities:
- Analyzing financial records to share internally.
- Supporting with budgeting and funding decisions.
- Managing investment portfolios.
- Evaluating the company’s performance.
Cost Accounting
Cost accounting is a type of management accounting focusing on the cost structure of a business. It assesses fixed and variable costs, including production costs, materials, labor, overhead, and leases. Cost accountants analyze these expenses to provide better cost management solutions.
Responsibilities:
- Analyzing the business’s operating costs.
- Developing cost standards for labor and materials.
- Overviewing factors that affect costs.
- Tracking inventory and spending.
Tax Accounting
Tax accounting is the most popular type of accounting. Tax accountants help individuals, businesses, and nonprofit organizations comply with the Internal Revenue Code. They also help their clients develop tax strategies to reduce their taxes as much as legally possible.
Responsibilities:
- Reviewing financial statements.
- Organizing financial records.
- Calculating taxes and preparing tax returns.
- Providing solutions to difficult tax issues.
Forensic Accounting
Forensic accounting is a type of accounting that focuses on auditing and investigating businesses and individuals to search for cases involving fraud, embezzlement, hiding assets, and so on.
Responsibilities:
- Analyzing and interpreting complex financial data.
- Communicating findings and testifying in court.
- Tracing funds and recovering assets.
- Helping with fraud prevention.
Governmental Accounting
Governmental accounting focuses on budgeting, managing, and tracking the government’s finances. It requires a skill set different from all other types of accounting because the government has unique needs that are unlike those of organizations in the private sector.
Responsibilities:
- Developing accounting procedures for the government.
- Managing the allocation of resources and financial planning.
- Tracking fund spending.
- Helping minimize expenses.
International Accounting
International accounting helps businesses that operate across borders or that want to expand their business to another country. International accountants help companies navigate regional, national, and local laws and regulations. They must adhere to the International Financial Reporting Standards (IFRS), developed by the International Accounting Standards Board (IASB).
Responsibilities:
- Keeping track of tax rules.
- Complying with the accounting standards of the country.
- Preparing financial reports.
- Reviewing financial transactions.
Public Accounting
Public accounting focuses on helping clients, including individuals, corporations, and small businesses, by providing services based on their needs. Public accountants may provide various services, from auditing to helping with tax returns.
Responsibilities:
- Reviewing financial documents.
- Preparing financial statements.
- Performing auditing services.
- Assisting with tax preparation and consulting.
Fiduciary Accounting
Fiduciary accounting is one of the types of accounting that deals with the financial transactions of an estate or a trust. Fiduciary accountants represent the beneficiary and provide information on expenditures, income, assets, and liabilities.
Responsibilities:
- Allocating receipts and disbursements.
- Protecting beneficiaries’ interests.
- Preparing fiduciary accounting statements.
- Maintaining records for reconciliation.
Accounting Information Systems
Accounting information systems is one of the types of accounting that uses technology to collect, track, and store financial activity for accountants to use. This system allows businesses to automate accounting and create more accurate reports.
Using AIS allows accountants to customize the platform to meet their needs and provide more accurate and secure financial information. These platforms can also integrate with other departments, like payroll and inventory management systems, to reduce manual data entry.
Now that you know the different types of accounting, it’s time to figure out which one your business needs and you might need more than one. For more information about types of accounting, you can contact AHG Chartered Accountants, the best chartered accountant, and auditor in Egypt.