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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. Here are some basic types of accounting, will help you understand the fundamentals knowledge about the working of various sectors in the field of financial management field.
WealthHow Staff
Last Updated: Sep 17, 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 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 process of financial management, businesses are able to decide if they are in profit or loss.
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 of certain financial institutions like Securities and Exchange Commission (SEC) and the International Accounting Standards Committee (IASC). A financial accountant is given the responsibility to assess financial conditions, which would help companies determine further steps in investment.
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.