The Accounting field is wide and varied. This variation is also the one that has brought about the different careers in the Accounting field. Here are (9) nine types of Accounting that have been identified:
- Financial Accounting
- Managerial Accounting
- Cost Accounting
- Auditing
- Tax Accounting
- Accounting Information Systems
- Forensic Accounting
- Public Accounting
- Governmental Accounting
Financial Accounting
This is the process that is used to record, summarise and report a company’s business transactions. The reporting of the company’s transactions is done through the following financial statements:
- Income statement
- Balance sheet
- Cash flow statement
- Statement of retained earnings
Managerial Accounting
This type of Accounting creates statements, reports and documents that help management in making better decisions that relate to the performance of a business. Managerial Accounting helps Managers achieve the following for the business:
- Plan for the business
- Organise the business
- Direct the business
- Control the business
Cost Accounting
Cost Accounting is a type of Accounting that determines the actual cost that is associated with manufacturing a product or providing a service. This looks at all expenses, both fixed and variable, within the supply chain. Examples of fixed costs include salaries, rental and insurance.
Variable costs are expenses that increase or decrease depending on the company’s production or sales volumes.
Auditing
This type of Accounting examines the annual financial report of an organisation by an independent party. The purpose of an audit is to verify if the information presented in the financial report reflects what is on the ground. The financial report includes the following:
- Balance sheet
- Income statement
- Statement of changes in equity
- Cash flow statement
Tax Accounting
Tax Accounting is a type of Accounting method that focuses on taxes rather than the public financial statements. Tax accounting is guided by the South African Revenue Services (SARS), which recommends specific rules that companies and individuals must follow when preparing their tax returns.
Accounting Information Systems
This is a type of Accounting which focuses on financial information as regards the following:
- Collecting it
- Storing it
- Managing it
- Processing it
- Retrieving it
- Reporting on it
- Making it accessible to:
- Accountants
- Business analysts
- Managers
- Chief Financial Officer
- Auditors
- Tax Agencies
- Regulators
Forensic Accounting
This type of Accounting uses accounting, auditing, and investigative skills to conduct an examination of the finances of an individual or business. It provides Forensic Accounting, providing an accounting analysis suitable to be used in legal proceedings. It is usually implemented when fraud is suspected.
Public Accounting
This type of Accounting refers to a business or individual who helps a range of clients, from individuals to corporations, prepare financial documents. This is opposed to an Accountant who is engaged by a private company. A Public Accountant can also perform the following duties:
- Preparation of tax returns
- Auditing
- Consulting services
- Advisory services
Governmental Accounting
Government Accounting is concerned with the systematic and scientific recording of government revenues and expenditures. It is the process of collecting, recording, classifying, summarising and interpreting the financial transactions relating to the revenues and expenditures of government offices.
It reveals how public funds have been generated and utilised for the welfare of the public.
What Is Private Accounting?
Private Accounting is also known as Industry Accounting. Private Accountants work as internal Accountants of businesses. This means that they do not offer their service to any other businesses except the one they are working for.
What Are The 10 Functions Of Accounting?
- Recording of financial transactions – This is usually the Bookkeeping part of accounting. This is done as soon as the transactions are done.
- Classify and summarise financial transactions – Transactions recorded through Bookkeeping are classified and recorded in the ledger and journalising the transactions
- Find out financial results – This is done by preparing a business’s income statement to determine a business’s financial results for a specific period
- Identify financial status – A Balance Sheet is prepared to show a business’s financial status at a given date
- Communicate financial information – Financial information can be shared with the following stakeholders:
- Business owners
- Employees
- Investors
- Analysts
- Bankers
- SARS
- Suppliers
- Analysis of financial data – A business analyses interprets and evaluates business data from financial statements for a variety of purposes, for example, determining profitability, work efficiency and accountability.
- Budgeting – Accounting provides the necessary financial information for the preparation of a budget
- Prevention of fraud and errors – By keeping proper accounts, a business can prevent errors and detect fraud within the organisation
- Controlling costs – Accounting helps in controlling the expenses of a business
- Determining taxes due to SARS – Businesses are by law expected to pay taxes. Accounting helps in determining the amount of taxes that are due.
How Many Years Do You Study Accounting?
Matric College offers the following two Accounting Programmes:
ICB Financial Accounting Programme
The courses for this Programme build on each other. This Programme can take 36 months as follows:
| COURSE | RECOMMENDED DURATION |
| 12 months | |
| 6 months | |
| 6 months | |
| 12 months |
NATED Financial Management Programme
The courses for this Programme build on each other. This Programme can take 18 to 36 months as follows:
| COURSE | RECOMMENDED DURATION |
| 6 months | |
| 6 months | |
| 6 months | |
| 18 months |
What Are The Two Main Books Of Accounts?
There are two main books of accounts. They are the following:
- Journal – The journal is subdivided into the following:
- Purchase Day book − Records credit purchases
- Sales Day book − Records the details of credit sales
- Return Inward book / Sales return book − Records returned goods by customer
- Return outward book / Purchase return book − Records goods returned to the supplier.
- General journal − Records entries which do not fit in other books
- Cash book − Records only cash receipts and payments related to cash
- Ledger – The ledger is subdivided into the following:
- Cash book − Records cash-related receipts and payments
- General ledger − Records all business financial transactions
- Debtor ledger − Provides information about the credit sales
- Creditor ledger − Provides information about the credit purchases
What Is Petty Cash?
A petty cash fund is a small amount of company cash, often kept on hand to pay for minor or incidental expenses, such as office supplies or employee refunds. A petty cash fund will undergo reconciliation. Petty cash transactions are also recorded on the financial statements. In larger companies, each department can have its own petty cash fund.
What Is The Meaning Of DR And CR?
The terms debit (DR) and credit (CR) have their roots in the Latin language. Debit comes from the word debitum, which means – what is due. Credit comes from the Latin word and credit comes from creditum, which means – something entrusted to another or a loan.
What Does Balance Sheet Mean?
The Balance Sheet is one of the three important financial statements. A Balance Sheet shows the business’s total assets and how the assets are financed either through debt or equity (ownership). The Balance Sheet is based on the equation, Assets = Liabilities + Equity. The Balance Sheet is also known by the following names:
- Statement of net worth
- Statement of financial position
What Are The 3 Rules Of Accounting?
The three rules of Accounting revolve around debits and credits, as follows:
- Debit the receiver and credit the giver
- Debit what comes in and credit what goes out
- Debit expenses and losses, credit income and gains
What Is Accounting Cycle?
An Accounting cycle is the steps that a business needs to take in order to verify that its financials are accurate. Here are the 8 steps that make up the Accounting cycle:
- Identify transactions
- Record transactions
- Post to General Ledger
- Calculate unadjusted trial balance
- Make adjusting entries
- Create adjusted trial balance
- Create financial statements
- Make closing entries
What Are The Professions In The Accounting Field?
Here are some professions in the Accounting field:
- Cost Estimator
- Forensic Accountant
- Tax Accountant
- Tax Attorney
- Accounting Clerk
- Accounts Payable/Receivable Clerk
- Accounting Information System Specialist
- Actuarial Accountant
- Bookkeeper
- Budget Analyst
- Financial Controller
- Cost Accountant
- Payroll Accountant
- Certified Financial Planner
- Financial Analyst
Author: Collin Wilbesi
Editor: Connor Bergsma
Date Published: June 29, 2022