Accounting is one of the oldest professions in human history. People used debt systems long before any concept of currency evolved. (Debt, The First 5000 Years)
Tax is often the first type of accounting that many people think of when thinking of accounting, but tax only comprises a tiny portion of the accounting field.
Types of Accounting:
Financial Accounting- Uses Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) to build an overall picture of a company’s internal and external framework. Publicly traded companies use financial accounting to show shareholders and stakeholders why they should continue to invest in the company.
Fund Accounting– Governmental, non-profit, and college accounting all fall under the umbrella of fund accounting. The main difference between fund accounting and financial accounting is that in fund accounting there is a hard budget. Everything revolves around the budget. Also, there are no shareholders in financial accounting. A fund balance is used in place of shareholder’s equity.
Forensic Accounting- Primarily an audit system of accounting reserved for the legal system. Forensic accounting is used for investigating fraud and embezzlement.
Management Accounting- Sometimes referred to as cost accounting. Management accounting deals with the everyday aspects of running a company. It is financial accounting but at a more detailed level.
Tax Accounting- Anything but boring. Tax accounting is an intricate web of puzzles. The rules of tax accounting are determined by the Internal Revenue Code (IRC), which is the tax accounting equivalent of GAAP.
Audit Accounting- The other side of financial accounting. Audit accounting looks at the business from an outside perspective. Organizations such as the Securities Exchange Commission (SEC) use audit accounting when reviewing publicly traded companies.
Professional Accounting Organizations: