What is accounting? Write down its 5 important types

Accounting is the process of recording every single transaction related to a business.

It involves different procedures and some of them are analyzing, summarizing, and reporting all transactions to the tax collection organizations.

How does it work?

Accounting is considered one of the main functions of every successful business.

It can be easily handled by an accountant at a small business firm or by a specific credible employee of a large business firm.

Here, the reports are generated by multiple fields of accounting like cost and managerial accounting to manage business in the best way.

Accounting is the most essential thing for making important decisions related to the business. It also helps to measure its economic performance as well.

It is as simple as a normal bookkeeper can deal with the basic accounting needs.

But, to complete larger or advanced accounting tasks, a Certified Public Accountant (CPA) must be hired.

If you are living in Willow Grove and want to record & organize your important tasks, hire a professional CPA.

The main responsibilities of a CPA Willow Grove are to organize and update all the important records either they are digital or physical.

The accountant is also responsible to analyze reports and every single transaction of a business to ensure accuracy in investments and other financial documents.

Further, in this article, we are going to discuss some main types of accounting in detail.

5 Major Types of Accounting

There are different types of accounting ranges from auditing of a business to the preparation of tax returns.

Some of the important types are mentioned below:

1.   Cost Accounting

Cost accounting plays a key role for businesses in making better decisions about costs. It includes every single cost related to making a product.

Almost every businessperson, manager, and different analysts use cost-making products to determine what exact cost their new products should cost.

2.   Financial Accounting

This field of accounting refers to the procedure used to create yearly financial statements.

The result of each financial transaction that happens during an accounting period is condensed into a balance sheet as a cash flow statement.

Also, an external Certified Public Accountant firm audits the financial statements of large business companies.

3.   Managerial Accounting

In managerial accounting, the data gathered in financial accounting is organized and utilized in different ways.

Here, an accountant generates a record of all expenses either in the form of quarterly or monthly reports.

The business management team to decide on all major operations of a business further uses the report.

4.   Public Accounting

This field of accounting investigates all the financial statements of the client companies.

It mainly focuses on assuring that the financial statements gathered by the clients will truly present their financial position.

Public accounting requires complete knowledge of the specific accounting framework.

5.   Government Accounting

This type of accounting requires a unique accounting to easily create and manage funds distributed to pay for several expenses related to a specific provision of services by a government utility.

Government accounting needs a different skilled and professional accountant that can tend to specialize within a specific area.