Here you can find overview of types of accounting in accounting area. In practice we can find a lot of different areas where accounting knowledge can be applied. We also can find lots of different types of accounting which depend on the type of information which is used and also on the functions which are performed by people working in that particular area.
The main accounting types we can identify are as follows:
- financial accounting
- management accounting
- accounting system design
- non-profit accounting
- cost accounting
- tax accounting
- budgetary accounting
Further we will cover in more details to each of those types.
I. Financial accounting – here we can talk about the activities, when the transactions are recorded and those transactions relate to business or certain entity. The transactions are summarized and data, which was recorded is presented in the form of financial reports for different decision makers.
II. Auditing – Here we have already prepared financial statements and we have auditors who perform independent review of the financial reports and accounting records, which support these financial reports. Auditors examine the accounting records and provide the opinion whether the financial reports and the accounting data included there presents the position of the business and the results of its operations properly and whether the presentation is clear and reliable.
III. Cost accounting – in this area the accountants need to determine and analyze costs, which are related to the manufacturing process. Accountants also implement certain procedures to control those costs, gather and examine information how these cost are being accumulated and how they change in a particular period of time. This area accountants also forecast the cost data for future in order to control it and in order to maintain it at a desired level.
IV. Managerial accounting – this area accountants are using both historic data which is for the past years and also future data or forecast data for the coming years in order to assist management in decision making and in daily operations.
In this area the accounting information is prepared in the certain form for the managers of the business. Then based on this information the managers make daily decisions, perform daily operations and plan future operations of the business.
V. Tax accounting – from the name of this area we can say that it is mainly related to tax and a lot of different functions can be found here. It is a preparation of tax returns, also calculation of taxes for the business, This area also cover tax planning. In this area the accountants are being involved in tax accounting, considering the tax consequences related to the planned or proposed business operations or transactions. Accountants decide how such transactions will impact taxes, therefore it is called tax planning. Also accountants suggest how to select the most favorable tax treatment taking into account prevailing legislation.
VI. Accounting system design – here we can find functions which are related to design and implementation of certain procedures, how to accumulate and report financial data. This area basically covers designing of all the process how to gather accounting data, how to record it, how to summarize and how to prepare financial statements.
VII. Budgetary accounting. This accounting area mainly relates to the preparation of budgets. Budgets include planning of future financial operations for a particular period of time, which can be month, quarter, half a year or one year or more periods. Budgetary accounting also covers comparison of the actual data with the plan and determining any deviations The next stage is to explain why such deviations happen and make certain decisions in order to improve financial operations of the business.
VIII. None-for-profit accounting. From the name of this accounting area you can understand that this area mainly relates to the accounting for a non-profit institutions or organizations, charities and churches. In this area of accounting accountants record, report and plan operations of such entities. These are entities which do not seek profit, but rather have special purposes.
So these were the main types of accounting in accounting area.