If you’ve just finished accounting, you undoubtedly still have questions about the many accounting fields in use. You might be asking why it’s essential to understand the different types of accounting branches. The ideal response is to use one or more of them later. Why not spend a few minutes learning about these accounting specialties?
The branches of accounting industry are inherently diverse, offering a wide range of accounting types, accounting terminologies, and accounting systems.
What do Accounting Branches Consist of?
Accounting departments collect, analyse, and communicate financial and non-financial data that affects a company’s ties to and interests in markets. Most businesses and corporations use accounting branches to evaluate the results of their economic operations. Several techniques are used by accounting branches to gather data and provide findings to creditors, investors, management, regulators, or tax collectors.
What are the Eight Types of Accounting Branches?
Different accounting methodologies exist. Some concentrate on expenses, others on audits, and some on taxes. The following are a few of the eight types of branch accounting:
- Financial Accounting
- Cost accounting
- Auditing
- Managerial Accounting
- Accounting information systems
- Tax accounting
- Forensic Accounting
- Fiduciary accounting
Detailed Information on Accounting Types
Here is more on types of accounting and how you can track your business’s finances using them.
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Financial Accounting
Financial accounting uses financial statements to track, compile, and report a company’s business activities. These consist of the cash flow statement, retained earnings statement, balance sheet, and income statement.
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Cost Accounting
All of a company’s variable and fixed production costs are tracked, analysed, and reported using cost accounting. The main categories of cost accounting are as follows.
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Auditing accounting
An independent review and assessment of a company’s financial accounts can be conducted either internally or by a government agency like the Internal Revenue Service.
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Managerial Accounting
The primary objective of managerial accounting is to maximise profit and minimise losses. It gathers, quantifies, examines, deciphers, and relays financial data to management.
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Accounting Information Systems
Accounting activity coupled with information technology resources is tracked by an accounting information system (AIS), a computer-based technique. Businesses utilise AIS as a framework to gather, manage, process, retrieve, and report financial data.
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Tax Accounting
Instead of emphasising public financial accounts, tax accounting concentrates on taxes. It focuses on behaviours that affect a company’s tax liability and how such actions connect to accurate tax calculation and document preparation.
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Forensic Accounting
Investigative, auditing and accounting expertise are used in forensic accounting to evaluate someone’s or a company’s financial situation.
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Fiduciary accounting
Documenting transactions related to a trust or estate is known as fiduciary accounting. It is handled using a cash basis. When money is received, it is recorded, and when it is paid out, it is recorded.
Conclusion
There are several types of accounting branches and what they entail. Unlike what many people think, accountants don’t just prepare taxes. In addition, accountants can audit companies, look into white-collar crimes, or focus only on working in the manufacturing and governmental sectors.
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