Discovering The 4 Types Of Accounting (Accounting 101)
Before getting into the fundamentals of accounting, it makes sense to look at the different types you can find out there, as these people may work for public or private companies and may have slightly different sill types.
This can also be useful to those looking to make a career path and aren't sure where to start, as some roles are more geared toward your ambitions and skills than others.
To find out more about these roles and whether they could be suitable for you or not, read on.
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The 4 Main Types Of Accounting, Explained
There are many sub-categories of accountants that can deal with various business processes, and these can lead to more prominent roles in that structure. Still, to keep it simple, four main types of accounting are widely recognized.
These are features of other firms or may additionally provide these services, but you can find the main accounting areas below.
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1) Corporate Accounting
During the day-to-day running of a business, there are going to be many transactions that, over time, can be hard to track and build a report from, which leads to a budget, then turns to a strategy that takes all of these factors into consideration.
As a corporate accountant, your job would be to create a variety of statements, such as income statements, budgets, balance sheets, and financial statements. These documents help a business understand how they are using their money and if they are overspending.
This can be useful as businesses have ideas and projects they need to plan and budget for, so an accountant can determine whether these decisions will give a good return on investment while looking at every financial decision a business makes.
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2) Forensic Accounting
These accountants use accounting and investigative work to look at accounts that may be associated with fraud or embezzlement. This role can be found in law enforcement agencies, financial institutions, government departments, and insurance companies.
You'll have tasks such as tracing funds, asset recovery, and asset identification. It may involve cases where dispute resolution is needed and where a good knowledge of legal issues and the judicial system is required.
As you will be looking at some complex cases that require you to look at things like assets, contract terms, valuation disputes, and any other case where an economic loss or gain is involved, as this can differ slightly depending on the institution you work in.
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3) Government Accounting
As it says in the job title, these accountants work in the interest of the country as they are present at the state, federal, county, and city levels. Any revenue from taxpayers, businesses, and bondholders is used to improve the local area.
You will be looking at the government's financial affairs and will relay information that ensures that the government follows a practice with high financial reporting standards. It also involves setting a budget, minimizing expenses where possible, and maintaining fiscal accountability.
As you look at how departments spend and receive money and reflect on how these financial practices work, you must know these standards and maintain these as you overlook these crucial aspects of government.
4) Public Accounting
You may be an individual or part of an accountancy firm that provides these services to businesses and individuals, and covers a few services from financial statement preparation, tax return preparation, consulting, and financial statement auditing.
You might find public accountants specializing in specific areas such as fraud investigations, initial public offerings, litigation support, or even health care auditing, where each firm employee has highly focused experience and knowledge.
You might be handling a few clients with different needs and support, and for transparency, it's unlikely that you'll be preparing and auditing financial statements for the same client. You may need to have a good level of flexibility for these types of roles.
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Are There Any Other Types?
There are more types of accountancy that go beyond the ones above and may be less well-known. These include a chartered accountant, auditor, investment accountant, project accountant, tax examiner, and financial advisor.
You may find these services as an addition to public accounting firms and may even develop their knowledge and tailor this to a client. They may specialize in a specific service in high demand, or it may be a sub-set in the firm.
Putting this all together, you can find that any of these sub-categories can be found except for those who may deal with private accounts or work for the government, so there's a good chance that someone can gain the skills they need from places such as these.
A financial planner, for example, may sound different to this area but you might find some of the skills that come from accounting are transferable to this profession, although they manage funds in different ways.
What Skills Are Preferred For This Career?
As well as a master's degree with a CPA certification, people get into this profession by testing their skills in a practical way where there could be some implications if any mistakes are made.
One of the primary skills is numeracy, but others may include IT skills, analytical ability, problem-solving skills, business interest and acumen, organizational skills, and the reflection of the broader consequences of financial decisions.
For those who want to work in specific areas or for the government, a strong knowledge of the processes and evidence of these proficiencies are often required, as some employers will value a demonstration of experience over certifications.
As you can see, accountancy can take on many forms and specialize in certain areas. You may even find individuals who work with smaller businesses or specific clients.
There are an array of opportunities and skills that can be learned from this profession, and being able to assist people in this way can be very rewarding.
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