When a company needs to evaluate its financial situation, assess its cash flow, establish the health of its operations, or understand its competitors, it usually goes to accounting. Small and medium-sized companies may hire a single specialist accountant, while large corporations and governments may hire an accounting company with several financial divisions to handle particular aspects of accounting.
The different branches of accounting
Accounting has evolved into many disciplines that specialize in certain legal issues or concentrate on a specific element of company.
Here is a list of accounting branches, along with a summary of each area's focus:
1. Financial accounting
Financial accounting include documenting and explaining company activities, as well as preparing and presenting financial statements. Financial accounting adheres to GAAP guidelines and relies on historical data.
Financial accounting offers critical economic business data for:
Creditors
Banks or financial institutions
Regulators
Suppliers
Tax professionals
2. Managerial accounting
Managerial accounting gives information to the internal structure of a business, mainly management. Managerial accounting, as opposed to financial accounting, monitors the use of money rather than the quantities of money. Managerial accounting focuses on the requirements of management and may not always adhere to GAAP accounting standards.
3. Cost accounting
Cost accounting, which is considered a subset of management accounting, focuses on cost evaluation. This branch takes into account all aspects of manufacturing in order to properly estimate the cost of a project or endeavor.
4. Auditing
Auditing is a kind of accounting that is often performed both internally and externally. Auditors evaluate and oversee a company's financial integrity, the accuracy of reporting, compliance with tax rules and regulations, and compliance with tax laws and regulations. Auditors may specialize in one of two areas:
5. Tax accounting
During tax planning or the preparation of tax returns, tax accounting adheres to state and federal tax laws. This section provides information on the impact of taxes on businesses and may provide advice on tax minimization or the implications of tax choices. Tax accountants compute income and other taxes based on the company structure.
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