Whether you want to hire an accountant for your firm or plan to pursue a finance and accounting career, it\u2019s beneficial to know the different types of accounting and the services under them. Here\u2019s a roundup of the seven (7 main types of accounting and how they can help you with your needs.<\/span>\u00a0<\/span><\/p>\n <\/p>\n Each type of accounting serves a specific purpose. To know which of these types are best suited for your entity, you must first understand their functions and how they can be applied to your daily operations.<\/span><\/p>\n \u00a0<\/p>\n The broadest and most varied type of accounting dedicated to providing different businesses with a range of services<\/span>.<\/span><\/i>\u00a0<\/span><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Becoming a Certified Public Accountant (CPA) is a major goal for most accounting graduates. For many accountants, a CPA license is like a badge of honor \u2014 something that brings them prestige and opens better career opportunities, not to mention the possibility of higher pay.<\/span><\/p>\n The benefits of becoming a public accountant are not only for accounting professionals. Business entities, in particular, can see financial improvements when there\u2019s a competent CPA on their team.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n In essence, <\/span>public accounting is the broadest and most varied type of accounting<\/span><\/strong>. To be a part of this practice, an accountant must have extensive knowledge of different accounting, business, and taxation concepts and how they can be applied in real life. This requirement shaped CPAs to be analytical of even the smallest details, a trait necessary for maintaining accurate financial information.<\/span>\u00a0<\/span><\/p>\n \u201cCPAs are among the most trusted professions,\u201d <\/span>an article from the AICPA & CIMA stated<\/span><\/a>. Trained to be independent and objective in their work, public accountants can \u201chelp you protect your interests, listen to and address your concerns and, equally important, give you peace of mind.\u201d<\/span><\/p>\n In what areas can public accountants help you then? Some of the duties you can expect include:<\/span>\u00a0<\/span><\/p>\n To add, CPAs have <\/span>unlimited representation rights<\/span><\/a> before the IRS, which can be useful in case of an audit.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/p>\n A type of accounting aimed at providing the management with financial data to aid decision-making.<\/i><\/span><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Successful companies do not rely on luck nor gut feeling. Their growth hinges on multiple blocks of grit, hard work, and most of all, smart business decisions.\u00a0<\/span>\u00a0<\/span><\/p>\n And to make smart decisions, <\/span>you need data<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n However, extracting meaningful insights from raw data requires expertise and a lot of work.<\/span>\u00a0<\/span><\/p>\n To save you from the hassle, it\u2019s best to work with <\/span>management accountants<\/span><\/a>.<\/span><\/p>\n Management accountants<\/span><\/strong> are primarily in charge of providing executives and their internal members with insights into an organization\u2019s performance. In general, here\u2019s what their responsibilities look like:<\/span>\u00a0<\/span><\/p>\n Aside from creating reports, management accountants also carry out tasks like asset management, budgeting, performance evaluation, and cost management.<\/span><\/p>\n They are also often involved in budgeting for the release of your new products and preparing financial data for your investors and tax authorities.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/p>\n A specialized type of accounting that focuses on the effective and proper allocation of funds.<\/i><\/span><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Not all entities are concerned with making a profit. On the opposite side of the spectrum, some organizations are more concerned about using the right funds for the right initiatives. These are usually tax-exempt organizations like nonprofits, government agencies, educational institutions, churches, healthcare organizations, and the like.<\/span><\/p>\n To ensure these organizations are using their funds properly, they need fund accounting.<\/span>\u00a0<\/span><\/p>\n Fund accounting, a niche type of accounting, is all about the accountability of funds. <\/span><\/strong>It tracks how funds are allocated and spent \u2014 and if they\u2019re used to their intended purpose. This type of accounting is an absolute must for keeping everyone in check and staying compliant with reporting requirements.\u00a0<\/span>\u00a0<\/span><\/p>\n Accountants who wish to do fund accounting must learn its nuances. For instance, unlike traditional accounting, fund accounting deals with more revenue sources but isn\u2019t concerned about making any profit at all. They also need to be familiar with both unrestricted and restricted (temporary and permanent)\u00a0funds<\/a>.<\/span><\/p>\n In general, fund accountants are responsible for:<\/span>\u00a0<\/span><\/p>\n On top of this, fund accountants are also in-charge of documenting the changes within an investment fund which serves as a basis for net asset valuation (NAV).\u00a0 <\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n A type of accounting that involves public accounting duties for government agencies.<\/i><\/span><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Another nuanced type of accounting is called <\/span>governmental accounting<\/span><\/strong>, which is instrumental in the accurate, transparent, and efficient use of public funds. Aside from instilling transparency and accountability, it also aims to support government officials in making informed decisions \u2014 thus, ensuring that revenues and expenditures are made according to the law.<\/span>\u00a0<\/span><\/p>\n In the U.S., state and local governments must follow the accounting standards set by the <\/span>Governmental Accounting Standards Board (GASB)<\/span><\/a>.<\/span><\/p>\n Like the Financial Accounting Standards Board (FASB) for private and public companies, GASB establishes financial and accounting standards for U.S. government agencies that adhere to\u00a0Generally Accepted Accounting Principles (GAAP).<\/span><\/p>\n Governmental accounting also follows fund accounting principles to ensure that the allocation and use of funds are compliant with legal and regulatory requirements.<\/span><\/p>\n Governmental accountants are key players in maintaining public trust. As such, some of their duties include:<\/span><\/p>\n \u00a0<\/p>\n An accounting function concerned with evaluating an entity’s risk management, control, and governance processes.<\/span><\/p>\n<\/blockquote>\n \u00a0<\/span><\/p>\n Every entity requires check and balance to guarantee adherence with relevant laws and regulations. At the same time, it\u2019s also necessary for building transparent and effective accounting practices.<\/span><\/p>\n But how do you know if your organization is compliant and follows good accounting practices?<\/span>\u00a0<\/span><\/p>\n This is where <\/span>internal audit<\/span><\/a> comes in.<\/span>\u00a0<\/span><\/p>\n![\"An](\"https:\/\/www.dvphilippines.com\/hs-fs\/hubfs\/Understanding%20the%20Basics%20of%20Finance%20and%20Accounting%20Outsourcing-1.jpg?width=1434&height=600&name=Understanding%20the%20Basics%20of%20Finance%20and%20Accounting%20Outsourcing-1.jpg\")
<\/span><\/p>\nRelated: Here are 4 Accountant Qualifications That Companies Look For<\/a>\u00a0<\/h3>\n
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The 7 main types of accounting<\/span><\/strong><\/h2>\n
1. Public Accounting<\/span><\/strong><\/h3>\n
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2. Management Accounting<\/span><\/strong><\/h3>\n
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3. Fund Accounting<\/span><\/strong><\/h3>\n
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Free Download: Level Up Your Investment Strategies: Back Office Fund Accounting Support for Fund Managers<\/a>\u00a0<\/h3>\n
4. Governmental Accounting<\/span><\/strong><\/h3>\n
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5. Internal Auditing<\/span><\/strong><\/h3>\n
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