Accounting is the practice of gathering and organizing financial data. Individuals who practice in this field tend to have degrees in accountancy and often are certified to practice legally as public accountants. All organizations that have financial planning needs also have need for accountants. This practice is also used in contexts where financial litigation or legal actions take place. Some of the most common types of accounting are management accounting, financial accounting, government accounting, and forensic accounting.
Management accounting is one of the types of accounting that are used by private businesses. Professionals who practice management accounting collect and organize financial data that is used by managers to form business plans and strategies. As a general rule, this kind of accounting is performed for interior use only. Accountants in this profession may deal with data regarding projects, budgets, and revenues.
Individuals who practice financial accounting also tend to work for private businesses. These types of accounting practices require professionals to prepare documents that are used by parties outside of an organization. For example, potential shareholders who are interested in the financial health of a company might request documents prepared by these accountants. Auditors from regulatory agencies may also ask for documents prepared by financial accountants.
Professionals who work in government accounting are professionals who serve the public. One primary difference between government accounting and types of accounting in the private sector, such as management accounting, is that the primary goal of government accounting is not to generate profit. On the contrary, individuals who practice government accounting tend to be concerned with matters of budget and planning for use of resources.
In the field of private accounting, professionals tend to consider a number of economic resources when they are preparing statements. They might look at assets, such as equipment and shares, as well as cash flow. Government accountants, on the other hand, look primarily at finances and how they are spent by different agencies.
Another of the common types of accounting is forensic accounting. Professionals in this field prepare and analyze financial documents that are used in a court of law. Most large organizations hire their own financial accountants to deal with issues such as fraud and employee claims regarding injury and other kinds of liability.
Forensic accountants also may work with individual clients in cases such as divorce and child custody. A professional may be responsible for determining the income of each party. While a forensic accountant is almost never asked to give an opinion in a legal trial or hearing, he or she may be asked to report findings.