If you run a business, big or small, you always have to keep a check on your cash flow. You have to keep a check on your earnings and your expenditures.
To make that possible, you always need to have an accountant in your ranks. An accountant is a pioneer of the study of accounting and is expected to prepare and examine all financial records of a company.
This got us thinking as to what accounting exactly is. Further, if there are more branches of the study. We try to understand what exactly is accounting and how many types of accounting there are. Take a look:
What Is Accounting?
The Oxford dictionary defines accounting as the process of identifying, recording, and analyzing financial information of a company or business. This further includes several intricacies, namely, providing a number of resources – both exhaustive and non-exhaustive – with a company, and advising on key financing and taxation matters.
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Needless to say, accounting is an essential part of any organization, as it keeps a keen eye on the business end of the things. Additionally, there are several branches of accounting. Let’s understand each of them one by one. Take a look:
#1. Financial Accounting
This is the branch of accounting that identifies, compiles, and analyzes financial charts for the internal use and knowledge of a company.
#2. Management Accounting
This is another financial statement that is produced strictly for use by a company’s management. It is usually more detailed and consists of key issues related to the company. This is extremely crucial because it is related to the management accounting, that a company can identify its financial weaknesses and work towards its betterment.
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#3. Government Accounting
This is also called public accounting, and it produces financial accounts for the public sector. Finances for government-owned sectors are important because the public sector generally has less money than the private sector. So, the role of governmental accounting becomes extremely crucial.
#4. Forensic Accounting
This field of accounting is responsible for the restructuring and reconstruction of financial records when a complete set of them is absent. Forensic accounting becomes imperative while evaluating the financial condition of a destroyed business, and also to reconstruct fraudulent cases.
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#5. Tax Accounting
As the name suggests, this field of accounting caters to all the tax-related dealings of a firm. Starting right from tax regulations to tax filing, and planning, this branch has to deal with all of it.
#6. Internal Auditing
Generally performed by a third-party accounting firm, internal auditing is a crucial aspect of accounting. It checks for every single detail of the company and makes an exhaustive list of all the financial weaknesses, frauds, and mismanagement within an organization.
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So, there you have it. Accounting and accountants are an indispensible part of any organization as they are crucial for observing and managing the financial revenues of a company. If you found this article informative, let us know in the comments below.
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