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FIELDS OF ACCOUNTING Accounting has a long and storied history, but its more than just spending hours

over tax returns and crunching numbers. Despite the many different methods and practices, there are six different fields of accounting that govern all of them. Forensic Accounting While its not as interesting as those forensic specialists who investigated murders on CSI, forensic accounting is an exceedingly popular subset of accounting that, in essence, deals with accounting that will typically become used in a court of law. This doesnt mean its accounting done for the courts, but rather accounting that arises out of litigation such as bankruptcy, divroce settlements, securities fraud, computer forensics, and insolvency. Forensic accounting is typically broken up into four different steps: data collection, data preparation, data analysis, and reporting. Fund Accounting While most accountants are concerned with profits, fund accountants prefer, well, funds. Simply put, fund accountants are typically utilized by non-profit organizations to manage their specific accounts and ensure that they are run in accordance with the law. There are numerous types of fund accounting available, from those on the state and federal level (governmental funds, proprietary funds, and fiduciary funds), to the five categories of non-profit funds (current funds restricted/unrestricted; land, building, and equipment funds; endowment funds; and custodian funds). Cost Accounting Cost accounting is essentially the type of accounting used by managers to manage the costs of their business. It arose during the industrial revolution, and features a number of different approaches. These include: standard cost accounting, lean accounting, activity-based costing, resource consumption accounting, throughput accounting, and marginal costing/cost-volumeprofit analysis. The principal elements involved in cost include labor, raw materials, and indirect expenses, also known as overhead. A major factor to consider with cost accounting is the difference between fixed costs and variable costs. Fixed costs refer to the price of individual costs remaining the same over a long period of time, while variable costs refers to prices that change over time due to a variety of reasons, such as depreciation.



Financial Accounting Financial accounting is for the big wigs! It refers to the field of accountancy devoted toward the preparation of financial for those who make the big decisions: CEOs, stockholders, banks, owners, government agencies, and more. In many cases, the information provided by a financial accountant is for the benefit of those outside a specific organization, and is typically used to serve a variety of ends. These include general knowledge of the financial stability of a company and how cash within the company is being handled, among others. The basis of financial accounting, beyond financial statements, is the equation Assets = Liabilities + Owners Equity. Management Accounting While financial accounting is designed to look at past accounting information, management accounting is used primarily to help managers make informed decisions about the financial wellbeing of their companies. According to the American Institute of Certified Public Accountants, management accounting involves three areas: strategic management, performance management, and risk management. There are countless methods and practices of managerial accounting

available, with a managerial accountant offering as many different ways to assist managers in the financial future of their business. Tax Accounting Everyone has had to deal with compiling and preparing taxes, but no more so than tax accountants. Tax accounting is simply the field of accounting devoted toward the preparation of taxes. The rules and regulations of tax accounting are different than those found in the Generally Accepted Accounting Principles, set by Section 446 of the Internal Revenue Code. Experience with tax accounting is relegated to those who have fairly convoluted tax preparation (freelancers, or businesses), and they often utilize the services of a tax accountant or a company such as H&R Block.


Computerised Accounting
The introduction of computerized accounting systems provide major advantages such as speed and accuracy of operation, and, perhaps most importantly, the ability to see the real-time state of the companys financial position. In my experience I have never seen a business that has upgraded to a computerized accounting system return to paper based accounting systems. A typical computerized accounting package will offer a number of different facilities. These include: - On-screen input and printout of sales invoices - Automatic updating of customer accounts in the sales ledger - Recording of suppliers invoices - Automatic updating of suppliers' accounts in the purchases ledger Recording of bank receipts - Making payments to suppliers and for expenses - Automatic updating of the general ledger - Automatic adjustment of stock records - Integration of a business database with the accounting program - Automatic calculation of payroll and associated entries Computerized accounting programs can provide instant reports for management, for example: - Aged debtors summary a summary of customer accounts showing overdue amounts - Trial balance, trading and profit and loss account and balance sheet - Stock valuation - Sales analysis - Budget analysis and variance analysis - GST/VAT returns - Payroll analysis When using a computerized accounting system the on computer, input screens have been designed for ease of use. The main advantage is that each transaction needs only to be inputed once, unlike a manual double entry system where two or three entries are required. The computerized ledger system is fully integrated. This means that when a business transaction is inputed on the computer it is recorded in a number of different accounting records at the same time. The main advantages of a computerized accounting system are listed below: Speed data entry onto the computer with its formatted screens and built-in databases of customers and supplier details and stock records can be carried out far more quickly than any manual processing. Automatic document production fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.

Accuracy there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system. Up-to-date information the accounting records are automatically updated and so account balances (e.g. customer accounts) will always be up-to-date. Availability of information the data is instantly available and can be made available to different users in different locations at the same time. Management information reports can be produced which will help management monitor and control the business, for example the aged debtors analysis will show which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet. GST/VAT return the automatic creation of figures for the regular GST/VAT returns. Legibility the onscreen and printed data should always be legible and so will avoid errors caused by poor figures. Efficiency better use is made of resources and time; cash flow should improve through better debt collection and inventory control. Staff motivation the system will require staff to be trained to use new skills, which can make them feel more motivated. Further to this with many off-the-shelf packages like MYOB the training can be outsourced and thus making a particular staff member less critical of business operations. Cost savings computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate. Reduce frustration management can be on top of their accounts and thus reduce stress levels associated with what is not known. The ability to deal in multiple currencies easily many computerized accounting packages now allow a business to trade in multiple currencies with ease. Problems associated with exchange rate changes are minimized.