When talking about accounting types of a company, all company societies are clear about what general accounting is, and what it is for. But within the accounting of the company we can find several branches specialized in specific phases, which can be very useful depending on the needs and objectives of the company. In this article we explain seven types of accounting to consider.
1. Financial accounting
Above all, it is used to obtain quantitative information of a financial nature in a structured way, through the balance sheet and the profit and loss balance. With this, we can keep track of the economic life of our company.
It is useful and necessary when you have to present financial statements in a standardized way to investors, public entities or other interested bodies. Therefore, it is not focused on business management. With this type of company accounting, data can be obtained in monetary units of interest at a financial level, such as solvency, liquidity, leverage, soundness, economic profitability or cash cycle among others.
2. Tax accounting
This type of accounting of a company is based on the fiscal criteria established by law, and regulates the way to make records and reports for the declaration and payment of taxes. Tax accounting can be very different from financial accounting, due to the large differences between accounting principles and financial laws.
3. Management Accounting
Also called directive accounting, it collects information of the same type as financial accounting, but for internal use, and also usually more exhaustively. It allows the control of society and the fulfillment of its strategic objectives. It also allows an analysis of the evolution of the company, since it can include results from previous years. Thus, it turns out to be a basic tool for the optimal planning of business management.
4. Management Accounting
Also called administrative accounting, it is a tool within the types of accounting of a company that has the objectives of evaluating, identifying and providing information about the economic activity of the company. Its use is exclusively internal, since it is used to adapt the accounting information to the needs of the company’s administration . It is usually expressed almost always in monetary units, although it is not regulated, as it is a process that does not transcend society.
5. Cost accounting
This accounting of a company classifies, accounts for, distributes and collects information on the costs generated by the company, in addition to dealing with the management of expected future costs.
This type of accounting encompasses the design and operation of cost procedures; the determination of costs by departments, functions, responsibilities, activities, products, territories, periods and other units; the comparison of the costs of different periods; of the real costs with the estimated, budgeted or standard costs, and of the alternative costs, among other concepts.
6. Accounting by activity
This is an accounting that links administrative accounting and cost accounting, although it can also be considered as a cost accounting model. It seeks to operate and classify the accounts that each of the activities, to improve the productivity of the company. This tool is very useful in decision-making since it makes a reliable portrait of the situation of society, but it is difficult to perform because of the number of factors it takes into account.
7. Service organization accounting
It is a particular type of accounting of companies that provide services, not goods, such as banks, hotels, consultancies, transport companies, etc.