Accounting Oveview, Importance, Types, Careers

All financial auditors are accountants, though all accountants are not auditors. Tax accounting requires accountants to be familiar with the various tax laws that change from year to year. Most businesses will use a standard costing system, which assigns an average cost to product production, though other costing methods can be used. Cost accounting is a specialty field that looks closely at the actual cost of doing business. This must be done using the standardized guidelines found in Generally Accepted Accounting Principles rules. These rules are set by the Financial Accounting Standards Board and are designed to promote consistency in the reporting process, so Company A will use the same reporting methodology as Company B. If you’re just getting through accounting 101, you’re probably still a little unclear about the various types of accounting fields being used today.

• It complies with the rules and policies of the company's Internal Revenue Code.
• Public accounting firms provide accounting services to a variety of clients, including service businesses, manufacturers, retailers, nonprofit organizations, governmental organizations, and individuals.
• This is required because managers won't want to remain tied to unpaid bills all the time.
• Financial accounting focuses on the reporting of an organization's financial information to external users of the information, such as investors, potential investors and creditors.
• Managerial accounting also includes monitoring company numbers on a regular basis, which might include looking at weekly sales figures, monthly overhead costs or quarterly revenues.
• The career track here is to progress through various audit staff positions to become an audit partner.

Also called financial accounting, this area of a company focuses on external companies that have expressed interest in the business. Employees create several financial statements to provide to investors. The most common ones include the balance sheet, income statement, and statement of cash flows. These documents help investors understand the financial strength of the company to decide whether they want to follow through with making an investment or not. Cost accounting focuses on a company’s production costs — what it spends to provide its goods and services, including costs for materials and labor. A form of managerial accounting, cost accounting analyzes the company’s historical data on fixed and variable costs of making a product, plus the profit earned from sales. It also helps companies create budgets for similar projects in the future and identify opportunities to fine-tune cost management and set prices.

What does a financial accountant do?

Prepare the financial statements to summarize all transactions for a given reporting period. Accountants may be tasked with recording specific transactions or working with specific sets of information. For this reason, there are several broad groups that most accountants can accounting be grouped into. The history of accounting has been around almost as long as money itself. Accounting history dates back to ancient civilizations in Mesopotamia, Egypt, and Babylon. For example, during the Roman Empire, the government had detailed records of its finances.

A general ledger is a record-keeping system for a company’s financial data, with debit and credit account records validated by a trial balance. The work performed by accountants is at the heart of modern financial markets. Without accounting, investors would be unable to rely on timely or accurate financial information, and companies’ executives would lack the transparency needed to manage risks or plan projects. Regulators also rely on accountants for critical functions such as providing auditors’ opinions on companies’ annual 10-K filings.

The Accounting Profession

It even keeps records of the public funds coming into government accounts. The most famous and debated divorce case of Hollywood celebrities Johnny Deep & Amber Heard can be the most suitable example to discuss the most interesting type of accounting, which is forensic accounting. In this case, both couples had the most controversial court session where they accused each other.

Fiduciary accounting provides a comprehensive report of activity within a trust during a specific period of time, including a record of all receipts and disbursements managed by the executor of the trust or the trustee. The terms “accounts payable” and “accounts receivable” illustrate the concept of accrual. Accounts receivable represents money that is owed by clients to the business. As with accounts payable, the debt owed to the company accrues until payment is made by the client and the debt is subsequently satisfied. There are eight branches of accounting that allow businesses to track and measure their company’s finances.

#2 – Project 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 Government offices. Project accounting is the accounting that is used by the company to track the progress of the different projects undergoing from the financial perspectives.

Governmental accounting ensures the financial position and performance of the public sector institutions are set in budgetary context since financial constraints are often a major concern of many governments. Separate rules are followed in many jurisdictions to account for the transactions and events of public entities.

Public Accounting

Accurate accounting also helps leadership make informed decisions about an organization’s long-term strategy. CPA’s ensure businesses and individuals follow generally accepted accounting principles , the set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board . They often handle a variety of accounting tasks, including tax preparation, financial planning, audits, and more, but may choose to focus on one particular area.