Today let us try understand the Different types of Accounting or Forms of Accounting. We often will tell different types of accounting yet we some time fall to understand or tell some one what does each types of accounting means. So today let us understand what does it means in this article.
Types of Accounting
Accounting has been divided into eight different types of Accounting. They are as follows,
1.
Financial Accounting
4.
Government Accounting
5.
Tax Accounting
6.
Inflation Accounting
7. Internal
Auditing
8.
Human Resource Accounting.
Now
let’s know about the branches of accounting one by one.
1. Financial Accounting:
Financial Accounting is the process of producing information for the user in the form of financial statements or records. The financial statements are prepared by following GAAP and other general accounting standards, accounting conventions and rules and regulations of accounts. It is primarily concern with the historical data. Financial Accounting helps the user to know the financial position of the firm or organization and also help in forecasting and making firm decision.2. Cost Accounting:
It is a branch of management accounting that involves the application of various cost techniques to monitor and control cost. Cost Accounting helps to analyze the cost occurred in a systematic manner which will help the user to analyze the cost and provide goods and services in the best prices to the customers. At the same time it helps to cut down the unwanted expenses incurred during production and produce goods and services at effective cost so that the organization financial condition is good.3. Management Accounting:
It is the application of professional knowledge and skills in accounting so as to assist management in formulation of policies, planning and controlling of operations. It is mainly produces for internal purposes. The information produced is mainly focused towards fulfillment of strategic means, enable effective organization control and objective of the entities. It involves financial analysis, budgeting, cost analysis, evaluation of business decision and other similar areas of a firm.4. Government Accounting:
It is also known as public accounting or federal accounting. It refers to the type of accounting information system used in public sector. The need to have the separate accounting system for public sector arises because different goals and activities of the state owned and privately own organizations and firms. Separate rules and regulations are being followed in jurisdiction to accounting for the transaction and events of public entities.5. Tax Accounting:
It is basically compresses of two types i.e. Tax planning and Tax Compliance. Tax Compliance refers to calculating the liabilities of tax of a firm at the end of the year. While Tax Planning refers to planning of the taxes of a firm or organization or individual in the beginning of the year so as to determine taxes. Tax planning helps to minimize the taxes by evaluating the consequences related to tax decision and other tax related matters.6. Inflation Accounting:
It is a range of accounting model design to correct the problem arising from historical cost accounting in the presence of high inflation rate. The financial statements are being prepared and adjusted using price indexes to show the correct financial statements in the presence of inflation. It is mainly used in the countries that experiences high inflation.7. Internal Auditing:
Internal Auditing is a process of reviewing the financial management practices in the firm or organization in order to check mismanagement, frauds and wastes. The evaluation of budgeting, management system and operations helps to assess the performance efficiency and compliance of laws and regulations. It helps to keep the financial statements healthy and show the right financial position of the company.8. Human Resource Accounting:
It is the process of identifying and reporting the investments made on the human resource of a firm. It helps to track the investment made on human resource and assess the profits from the human resource by analyzing the investments and returns from human resource. It is an extension for standard accounting principles.I hope now you have understood different Types of Accounting after going through this article.
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