Accounting:

The definition of accounting is the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results. Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities.

Types of Accounting:

1. Financial accounting

Financial accounting is primarily concerned with the process of compiling information for financial reports for external reporting. Financial accountants work with their colleagues and managers to strategize how a company can be more profitable.

2. Managerial accounting

This type of accounting documents, monitors and assists in the financial planning of an organization. Their documentation is typically meant for internal stakeholders rather than the public.

3. Cost accounting

Cost accounting can be seen as a subcategory of managerial accounting; however the activities of cost accountants will affect both financial and managerial accountants. Cost accountants are responsible for documenting, presenting and reviewing manufacturing costs. They oversee all variable and fixed costs to see if output aligns with the cost to produce a product.

4. Auditing

External auditing is the action of a company providing financial documents to a third party for financial feedback. In this instance, a third party is a reliable source in describing if a company’s financial statement is a representation of GAAP. Internal auditing determines the effectiveness of internal accounting processes. An internal auditor can review employee departmental responsibilities, management policies, and approval procedures on related projects.

5. Tax accounting

Tax accountants help businesses stay in compliance with the Internal Revenue Code when they file their tax documents each year. They also assist companies in planning for future tax returns, such as avoiding certain tax burdens and understanding the implications of specific tax decisions.

6. Accounting information systems

Accounting information systems, or AIS, is the system by which a company collects, stores and processes its financial and accounting data. Many AIS are now built to integrate with other departments such as connecting the hiring process in Human Resources to the payroll function of a newly hired employee.

7. Forensic accounting

Forensic accounting is used to investigate the financial records of individuals or businesses. It can require accountants to recreate financial information when some information is missing or not available to review. The goal of forensic accounting is to gather all available documentation and accurately and comprehensively account for all transactions in financial statements. These professionals often work on legal cases involving fraud, claims and disputes.

8. Public accounting

Public accounting refers to businesses that provide accounting advice to clients based on their needs. They can work in auditing, assist with tax returns, consult on procedures tailored to the installation of technology or computer programs and provide legal advice.

9. Governmental accounting

Governmental accountants manage the financial planning and allocation of resources to departments within a local, state or federal government. This type of accounting has standards that must comply with the Governmental Accounting Standards Board (GASB), which is responsible for developing consistent accounting procedures for local and state governments.