How Accounting Is Categorized Into 7 Types?

Any business or organisation needs to follow one or several accounting categories. Every branch of accounting serves a different purpose in an organisation. The main focus of accounting is to gather and maintain all financial records. These records are useful in preparing various reports necessary for the business and stakeholders. Accounting is a necessary process that helps find out mistakes and fraud in a financial system.   

7 Basic Accounting Categories: – 

• Financial Accounting 
• Tax Accounting 
• Project Accounting 
• Managerial Accounting 
• Government Accounting 
• Foreign Accounting 
• Cost Accounting 

Let us discuss the 7 major accounting types in detail-  

• Financial Accounting  

Financial accounting is used in almost all companies in order to prepare the annual financial statement. It involves the process of aggregation and compiling all financial data. Then they produce the financial information of the company in form of financial statements. These statements are used by the stakeholders of the company and determine whether it is running in profit or loss.

 In the financial statement of the company, there are the balance sheet, profit and loss account, cash flow and equity change statement.  

• Tax Accounting 

Accounting of tax-related matters comes under tax accounting. If you have to do VAT return filing, it will be calculated under tax accounting. In this process, you have to calculate the income tax and any other taxes if applicable. It also includes the timely tax payment to the authorities to maintain a good track record. Tax accounting is important as paying necessary taxes is essential. It reminds you to pay your taxes on time and make your statement clear.  

• Project Accounting 

If a company runs several projects under its name, it should maintain project accounts. It is used by the company to track the progress of different projects from a financial perspective. It is an undeniably crucial part of project management. It helps the company to stay under a certain budget allotted for the project by the authority. Also, you can keep track of the work progression of each project.  

• Managerial Accounting 

Another important accounting type is managerial accounting. The main focus of the managerial accounting process is to gather and accumulate the financial information to be used for internal operational reporting. It is an integral part of the internal working of the company. Managerial accounting helps in keeping your business or organisation disciplined. It is difficult to track every financial detail of a company without different accounting systems.  

• Government Accounting 

Govt. accounting primarily focuses on the financial administration of Government activities. It helps promote welfare to the different sectors in the form of various services offered by the Government. Government accounting is concerned with the systematic recording of the income and expenses in the Govt. offices. Maintaining the balance sheet of the Govt. office is the prime aim of such an accounting system.  

• Foreign Accounting 

It involves keeping records of legal financial information and other necessary documents. With the help of these records, you can prepare a report on foreign accounting. It is used to investigate and identify fraud in a financial statement presented by a company.  

• Cost Accounting 

Cost accounting focuses on capturing various costs of production, such as input cost, fixed cost etc. After the analysis of different costs and their comparison with the actual cost incurred, the company can make corrective changes.  

The Bottom Line 

By using a professional accounting service you can improve your company’s efficiency and production. You will not have to spend a lot of money on accounting software. But you can enjoy the benefits of modern technologies using the accounting service. A firm offers you the service of an experienced and expert accountant at a reasonable price.

 You do not have to employ staff, train them and experience the hazards during staff replacement. Thereby, you can save a lot of money on accounting and financial reporting. It is a wise idea to invest a little portion of that saved money in hiring a professional accounting firm. You will receive excellent services within a given time and at a reasonable price.  

There are several reliable accounting firms in Dubai, like Accountant Dubai. Their experts can assist you with accounting and financial reporting assuring that all legislative obligations are met.  

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