Types of accounting

Types of accounting

The types of accounting are as follows

1.Financial Accounting - In this type of accounting, the account of money transactions used in the business is written in books (such as journal, ledger). Balance sheet, profit-loss account are prepared at the end of each year. One special thing about this type of accounting is that it is meant to be shown to outsiders such as banks, investors, government etc.

2. Management Accounting - In this type of accounting, the reports and data prepared are for the management inside the business and are given to them only. This is not for outsiders. Outsiders like banks, investors, government etc. Financial accounting is for giving to outsiders. Management accounting is for those who manage the business. The purpose of making this accounting is to plan for the future, control budget and expenses.

3. Cost Accounting- In this type of accounting, a company or an organization is making and providing a product or providing some kind of service to someone. So obviously, it will require a lot of things and people so that that product and service can be made available in the market and to the right people. Money has to be spent in all this. The account of this money spent is kept and this is called cost accounting.

4. Tax Accounting- Any kind of business or means of running a business, that is, howsoever you are running your business or employment. Some part of the income from all these has to be given to the government in the form of tax. The account of this tax transaction is kept is called tax accounting. This type of accounting helps in correct calculation of GST, income tax, custom duty etc.

5. Forensic Accounting - Be it any kind of business or organization, there is always money transactions in all of them. Money accounts also have to be maintained. The account keepers can keep the accounts correctly and they can also make mistakes. It is obvious that humans do make mistakes. And there can also be fraud in this, that is, any person concerned can deliberately make mistakes in the accounts or make wrong accounts for his personal benefit. Investigating such money accounts and finding out and noting where the mistake or fraud has happened is called forensic accounting.

That is, in this, by checking the records, it is found out whether there has been a mistake or cheating or not.

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