Four Major Types of Accounting Mostly Used by the Business
Nowadays, it is essential for every business to maintain its financial statement for auditing and tax return purposes. Accounting plays an effective and efficient role in the preparation of tax returns. The large business hires a permanent accountant firm to maintain its financial records in the books of account. But the small company hire accountants who are capable of maintaining the books of accounts. The primary purpose of accounting is to show the financial position of a business by maintaining its assets and liabilities.
The accounting is done by the accountant who is specialized in one of the accounting fields. There are numbers of an accounting system that is followed in a different country, and each accounting type is useful for different purposes. Different types of accounting are financial accounting, cost accounting, management accounting, corporate accounting, public accounting, government accounting, etc. All these types of accounting are done in different ways, and it has different rules and regulation. Accounting is done for different purposes, but the main and common purpose is to manage the business functioning smoothly.
What are the objectives of accounting?
The accounting is done with an objective of recording, planning, and decision-making, determine business performance, know the financial position of the business, etc. The accounting objects help to build a reliable framework in order to produce accurate and proper financial information consistently.
The fundamental role of accounting in a business is to maintain a systematic, accurate, permanent, and complete record of all the financial transactions. The accountings also help in planning the process of allocating business limited resources. Accounting is better decision making and to develop policies in order to make the organization working more efficiently.
Different types of accounting
- Financial Accounting
Financial accounting is the main purpose of providing different financial information. The financial accounting is used of summarizing, analyzing, and for reporting of all the financial transaction that is related to the business. The preparation of financial statements is included in financial accounting.
- Cost and management accounting
The main purpose of cost accounting is to record, summarize, and classify the cost, and the management accounting work is to manage the cash outflow and cash inflow. Cost accounting determines the cost based on the records, but the management accounts only depend on the present records.
- Corporate Accounting
Corporate accounting deals with business accounting like preparation of final accounts, analyzing and reporting the company’s financial statement, and many more. Most of the corporate structure uses corporate accounting, as it is useful for getting accurate financial information.
- Tax accounting
Tax accounting’s main purpose is to record, determine, and analyze taxes. Tax accounting is different from other types of accounting, as it only focuses on taxes, not in the public financial structure.The types of accounting that are mentioned above are some of the popular types.
There are many more types of accounting that are used by most of the business in order to know the business expenses and earnings.