The Types of Accounting You Really Need to Know

Types of Accounting
The word 'accounting' is used in a very abstract manner; however, it encompasses many financial methodologies. The article below contains some basic types of accounting, which will help you understand the fundamental knowledge about the working of various sectors in the field of financial management field.
WealthHow Staff
Last Updated: Jun 3, 2018
You have to know accounting. It's the language of practical business life. It was a very useful thing to deliver to civilization. I've heard it came to civilization through Venice which of course was once the great commercial power in the Mediterranean. However, double entry bookkeeping was a hell of an invention. ― Charlie Munger

Accounting is believed to be one of the most important elements in the business world where money is almost everything. It is termed as a process in which finances of an organization are recorded for further assessment. By employing the purpose of accounting and this process of financial management, businesses are able to determine if they are earning profits or going in losses. Quite contrary to a common misconception, the practice of accountancy was carried out even in the early ages. It is only with new types of accounting and Information Technology (IT) that it has advanced to a greater level. The principles of accounting are the basis of carrying out the accounting process.

Financial Accounting

For carrying out this type of accounting, professionals use guidelines laid down by certain financial institutions such as the Securities and Exchange Commission (SEC) and the International Accounting Standards Committee (IASC). A financial accountant is handed over the responsibility to assess financial conditions, which would help companies determine further steps in investments.

Management Accounting

Management accounting is one of the most important types of accounting careers. It deals with studying, analyzing, and recording the financial aspects of business firms. Few of the sub sections of this field of accounting are asset management, internal auditing, financial planning and budgeting, etc. Professionals working in management accounting really need to be adept in using related computer accounting software for data management.

Governmental Accounting

As the name suggests, governmental accounting is a field that relates to financial management of the federal, state or regional government. It concentrates more on providing data management services instead of earning profits. An accountant employed in this sector usually looks after the audits, budgeting, and financial management of government facilities.

Fiduciary Accounting

The task of fiduciary accounting is normally handed over to a trustee or an administrator in a non profit organization or a specific community. This accounting is likely to be administrated or initiated by the court. A fiduciary accountant performs traditional accounting duties, like record maintenance, financial assessment, and even asset management.

National Income Accounting

National income accounting is associated with the social and economic factors of a nation, unlike just the financial management in a company. It covers a much broader scope, which eventually gives out results such as the purchasing capacity of a country per year. The use of national income accounting also enables a country to find out the market value of goods and services manufactured in the country for a specific time period.

Project Accounting

Project accounting is very much similar to management accounting. However, both types of accounting are conducted in business; it is only that project accounting is concerned with the financial advancements on a particular project. It is believed to be a very effective tool in project management. This helps organizations to schedule the deliverable in accordance with the project progress reports.

Other Types of Accounting
  • Forensic Accounting
  • Public Accounting
  • Social Accounting
  • Fund Accounting
  • Tax Accounting
Remember that each type of accounting has its own set of principles and rules for processing work. A wide range of Enterprise Resource Planning (ERPs) and accounting software packages have enabled accountants to keep records in an orderly manner.