5 Categories of Accounting

When individuals consider a career in accounting, they need to consider a potential specialty. Accountants pursue education and career experience in a particular area of expertise, which often means trading off a career in a more specialized area of accounting. For those interested in joining the field or looking to hire an accountant, understanding the major categories of accounting is critical.

Financial Accounting

Financial accounting is a category of accounting that deals with the record keeping of a firm's basic transactions. In practice, financial accounting includes both the everyday practice of maintaining a business's books and the occasional audit to ensure that its accounting practices are consistent with generally accepted accounting standards. According to the AccountingCoach website, the purpose of financial accounting "is to provide enough information for others to assess the value of a company for themselves."

Management Accounting

Another major area of accounting deals with the way management uses financial information. In management accounting, firms develop budgets and projections based on information from financial statements, and make plans for future business growth. This category of accounting especially relates to the relationships between different reported numbers -- for example, between sales and income -- and how these relationships support or challenge the success of business strategies.

Government Accounting

As governments almost always spend public money, one category of accounting deals with the special regulatory and logistical requirements of keeping track of taxpayer funds. Government accounting practice relates to the careful supervision of different public funds, ensuring that the government accounts for the money spent in a manner consistent with legal requirements. In addition, government accountants provide information to public officials, who use financial records to help guide policy decisions.

Tax Accounting

Tax accounting is a category that deals with the preparation of personal and business finances for tax returns, payments and filings. Tax accountants are familiar with tax laws, and with the details of tax credits and deductions and how an individual taxpayer can apply for them. In addition, they specialize in different local tax requirements, including ways in which particular taxes may affect strategic decisions for business.

Macroeconomic Accounting

Macroeconomic accounting, or national income accounting, relates to the development and reporting of figures for an entire country's economy, rather than an individual business or industry. This data is valuable both to inform economic theories and to evaluate the effects of government policy on the economy. National income accountants develop and execute strategies for properly determining aggregate -- or national scale -- economic indicators.

References

• AccountingCoach: Financial Accounting
• University of North Florida: Introduction to Managerial Accounting; Diane Tanner
• PolicePay.net: Understanding Governmental Accounting; 2005
• Deloitte: Tax Basics -- What Every Accounting Major Should Know; Kate Manzke, et al.; 2008
• Penn State: Lecture Notes on National Income Accounting; Barry Ickes; Fall 1999
• "Macroeconomic Theory: A Short Course"; Thomas R. Michl; 2002