11 Types of Accounting That Can Help Your Business
Being indispensable for business organizations for attracting new visitors, budget expansion, recouping clients, and maximizing sales & employee benefits, Accounting with diverse methods that come under it makes the right fit for all businesses and industries irrespectively. With diverse branches of accounting, businesses track and measure their company finances. Each of these branches comes with specialized capabilities revealing diverse insights into a business’s financial status. Acknowledgment of these diverse niches is critical for business owners for achieving long-term success and viability. This article is aimed at acknowledging small, medium, and large scale businesses of the various branches of accounting and what they entail. As it is mandatory to be well versed with particular types of accounting as per changing requirements, businesses can have a strong handle on their finances for tracking their expenses and income. OURS GLOBAL’s Finance & Accounting Outsourcing Services cater to a comprehensive spectrum of financial accounting services for streamlining, organization, and efficient running of a business. Helping businesses maintaining the right balance across business transactions, compliance, and optimization of funds. With weekly, monthly, and annual financial reports we cater assistance over requirements from open invoices to payroll summaries, forecasts to budget versus actual review reports, trial balances, finalization reports, financial statements, etc. Adopting best-in-the-industry practices, our innovative and technology-enabled efforts help businesses to compile timely and accurate financial insights for the right decisions for driving businesses forward.
Following are the Eleven Types of Accounting That Can Help Your Business:
1. Financial Accounting
Aimed at tracking, recording, and ultimately reporting financial transactions for the generation of financial statements, Financial Accounting is to be done with the application of standardized guidelines as per the Generally Accepted Accounting Principles (GAAP) rules outlined by Financial Accounting Standards Board (FASB) for promoting consistent reporting process. Studying past financial accounting performance, financial accounting gives an accurate picture of business performance over a specific time period in the financial statements. Financial accounting incorporates double-entry accounting for the accurate recording of financial transactions. Helping in making outside stakeholders of investors and financial institutions of business condition with complete financial statements. It is also critically important for publically traded companies and normal ones for strategizing companies to be profitable. Tracking all financial activities and ensuring internal procedures financial accounting is an effective way for conveying financial state to outside sources.
2. Cost Accounting
Intensively focusing on the actual cost of running a business, cost accounting can be quite beneficial for manufacturing environments and service businesses as well. Committing onto both fixed and variable costs that businesses have to attend to, costs related to materials, labor, overhead, maintenance, and production costs, this approach ensures effective management of important information such as break-even points. With the application of a standardized costing system, businesses can use this accounting technique for assigning an average cost to product production, among other costing methods. This form of management accounting helps businesses to concentrate on their future and aid their decision-making process rather than just reporting past performance.
3. Auditing
Objectively examining, tracking, reporting, and evaluating a company’s financial statements, Auditing drives an independent analysis of financial activities to ensure all transactions to be compliant with all acceptable rules and standards. Determining the effectiveness of internal accounting processes, auditing can also help with management policies and approval procedures on related projects for attaining profitability and efficiency.
Auditing can be of diverse types as follows:
1.Internal Auditing
Improvement of Accounting processes and internal controls.
2.External Auditing
Review of financial statements and internal controls.
3.IRS Auditing
Review of financial organizations for maintaining compliance with internal or external tax regulatory laws.
4.Investigative Auditing
Standardized investigative auditing for identifying criminal or any suspicious activities.
4. Tax Accounting
Enabling businesses to stay afloat all current tax rules and regulations set by the Internal Revenue Code for tax accountants to ensure accuracy over calculation and reporting of tax liabilities for their clients. Tax accounting demands accountants to be well versed with various tax laws that can change from one year to another, for accurate calculation of tax due, lower tax liability, execute accurate tax returns, and file tax forms accordingly. Critical for individuals, businesses, government entities, and nonprofits for the preparation of tax returns, tax accounting proves too effective in tax planning guiding businesses and individuals for the development of tax strategies for minimizing due taxes.
5. Forensic Accounting
Uniquely combining accounting, auditing, and investigative techniques, Forensic accounting investigates the financial activities of multiple individuals and businesses. Assisting banks, police departments, attorneys, and businesses, for accurate examination of financial transactions and later compilation of those findings to a completed report, forensic accounting is the most suitable for fraud and embezzlement cases, with the application of data collection and preparation techniques, data analysis, and reporting methods. This approach can also be used for recreation and reconstruction of financial data and for testification in court for verifying their findings.
6. Governmental Accounting
Helping organizations to be their finances in check with GAAP rules devised by GASB or Governmental Accounting Standards Board for development of tracking and reporting standards at all levels. While governmental accounting incorporates separate funds for keeping track of expenditures and income. For every improvement project, government bodies keep extensive tracking of incomes & expenses in comparison with the project in a capital projects fund. Governmental Accounting Methods are critical for accurate reporting of each fund or program on performance and spending nature of the public money. Such governmental funds are used for tracking the general fund, permanent fund, special revenue fund, capital projects fund, and debt services fund. Separately tracking each fund, Government reporting provides a comprehensive report over the spending of money as well as accounts for remaining funds.
7. Public Accounting
Assisting businesses, manufacturers, retailers, non-profit organizations, governmental organizations, and individuals, public accounting focuses on the efforts of auditing, tax preparation, tax advisory, and consulting, financial statement preparation & analysis, etc. Helping companies in devising various strategies, mergers, acquisitions, and internal accounting systems, Public Accounting can also address other requirements such as complete bookkeeping, accounting management, financial consulting, and payroll services. With the appropriate guidelines and accounting insights in the achievement of fruitful business results, public accounting helps businesses in scaling their processes up and down as per their requirements.
8. Managerial Accounting
Identifying, measuring, analyzing, interpreting, and communicating financial information to the management, managerial accounting helps businesses for maximizing their profit and cut down their losses. Guiding business owners and managers in taking value-added decisions, suits internal stakeholders rather than the public. With a clear demand for careful communication of confidential information, these can also be effective in analyzation and creation of budgets for sufficing requirements of short-term and long-term organizational goals. Following are the varied techniques that come under managerial accounting:
1.Capital budgeting: Analyzation of information for making necessary decisions related to expenditures, managerial accounting derives its findings as a boon for owners and managers to guide their decision making.
2.Trend analysis and forecasting: Analyzation and forecasting of industry trends for identification of product patterns & trends and recognization of unusual from the forecasted values.
3.Margin analysis: Analyzing strategies for optimization of the production, margin analysis calculates the break-even point, and helps in the regulation of optimal sales mix for the company products.
4.Constraint analysis: Analysis of inefficiencies and how it affects the company’s abilities for generating profits.
Thus managerial accounting assists organizations in analyzing financial information and provide end-to-end performance reporting for comparison of actual profits with projections.
9. Accounting Information Systems
AIS or Accounting information systems track accounting operations with the combination of information technology resources. Enabling businesses for collecting, storing, managing, retrieving, and reporting financial data, AIS can be beneficial for auditors, tax agencies, business analysts, CFO’s, consultants, and accountants. Blending physical technology for processing and storage of data, this technique requires the inclusion of appropriate software for handling specific tasks such as document creation and spreadsheet management. Transmitting this information through wires, wifi, or LANs, the accounting information will be later stored and retrieved in organizational warehouses as per requirements. Later the qualified and well-experienced professionals will compile data and interpret the final knowledge contained in databases and warehouses.
10. Fiduciary Accounting
Recording of financial transactions related to a trust, estate, or a business organization on a cash basis, during receiving and disbursements, this information can prove to be beneficial for beneficiaries and legal disputes too. Each country has varied fiduciary accounting rules and compilation of descendants or grantors will be fused into the will or the trust document. Setting up accounts on the behalf of another person who owns the money and the properties, the principal or owner can get a comprehensive report of financial activities within a trust during a specific period with Fiduciary Accounting. This will involve a record of all receipts and disbursements under the management of trust or trustee.
11. Accrual Accounting
Recording transactional data accrual accounting deals with all transactions that make up a companies overall operations. Recording revenue and expenses within each, transaction much contrary to other methods not at retrieval or making of payments. When accounts payable are the pending payments to vendors, these payables accrue until the settlement of underlying debts, whereas accounts receivable is the pending payments from clients, and this debt owed is accrued until the client payment.
Thus accounting and finance operations are both vital to the healthy functionality of a business. With such varied types of accounting, we have mentioned above, each has their different notions and accomplish different goals. Businesses must understand extensively that each finance operation is a way how businesses can acquire their money and how they can distribute to requirements covering expenses. OURS GLOBAL’s Finance and Accounting Outsourcing Services helps develop accounting information readily understood by government bodies and business officials respectively. Businesses who urge to tap the potential of all the accounting scenarios described above can contact us and enrich every potential in the achievement of best results.
