Accounting is a science that society can’t do without because of many reasons, but mostly because of the field’s functionality. Should accounting cease to exist, we wouldn’t have the means to analyze and manipulate financial data for every sector of society.
That is also the main reason why the demand for proficient accountants never goes away. Individuals who have taken the time to study the basics of accounting can recognize concepts like capital, revenue, and accrued expenses. Even in the oil and gas industry and other sectors, this makes them valuable.
With how useful they can be, it’s no surprise that anyone in the accounting field has several routes, known as types of accounting, to choose from upon getting their license to practice. We discuss some of them below.
Financial Accounting
Large or small, businesses are comprised of several components that allow them to run efficiently and with no trouble. Among these components is the financial statement. Accountants who pursue financial accounting are tasked with the preparation of these statements, which entails gathering data and ensuring that there are no discrepancies in the information.
The financial statements that are drawn up usually include the following:
Balance Sheet – contains the assets of the business, which is equal to liabilities plus the equity of the owner and shareholders after an accounting period.
Income Statement – shows how much the business has gained and lost within a specific accounting period. Net income is mainly expenses subtracted from revenue.
Cash Flow Statement – is the cash flow that is similar to the income statement that records the company’s performance in a certain period. However, the difference is that the cash flow, as its name suggests, takes into account only actual physical money generated by the business. This statement is divided into three (3) parts: operating, investing, and financing.
Aside from managing the financial statement, accountants in this field also file taxes and make sure that they are paid on time.
Tax Accounting
All government activities are funded by the people, businesses, and corporations through federal and state taxes. Accountants who enter the field of tax accounting are responsible for making sure that their clients comply with tax laws by filing their tax returns on time. Tax accountants can also offer their services through planning advice. It can help their clients, individuals and organizations alike, achieve their financial goals on time and without having to pay extra on taxes before deadlines.
Internal Auditing
As businesses grow larger in scale, it becomes possible for complications to arise and affect the effectiveness of the organizations’ operations. For them to remedy the problem, businesses are encouraged to hire accountants in the field of internal auditing.
Auditors can be entrusted with spotting problems in the company’s financial affairs. These include mismanagement, fraud, and potential waste. Afterwhich, they study the case so that they can figure out the solution to the company’s financial dilemma. With their help, high rates of efficiency can be restored, while losses can be limited to a minimum.
We should note that a business need not have problems to take on auditors. Even with no trouble looming, auditors can provide aid by coming up with ways to improve the company’s operations and protect them from fraudulent acts.
