The Different Sections of Accounting

Accounting is the backbone of any organization. But it is unfortunately one of the most ignored aspects of the company. We all know there are accountants working in our organization but we are never quite sure what they do. Yes, we do know that if we are not getting our salary right, they are the people to hound! But other than that, what is their function in the organization? Well, they are the ones that are keeping track of all the inflow and outflow of money, what is being done with the money and how it is being spent. Basically the economic condition of the organization lies in their hands. Their understated position in the company often undermines their importance. Its effects can hinder the long term economical prospects of the company.

For the regular people, accounting seems like a big ball of numbers and nothing else. Accounting actually has many segments that look after different areas. The level of diversification usually depends on the size of the company. In the smaller companies, a single accountant might be looking after everything while in the bigger ones there might be different teams for every section. The different segments of accounting might seem too fine for us to make out the difference. One big divide however is often quite marked – the difference between financial accounting and management accounting. Now, a single team might still be responsible for dealing with both aspects but they each have distinct features that are easy to differentiate.

Financial accounting deals basically with the here and now of the company – the earnings, the expenditure, and the profit and loss of the current times. There is always a specific period that is taken into account when accounting, usually the financial year. The term of financial year is different for different countries. In Australia for example, the fiscal year starts from 1st July and ends in 30th June. Now during this period, every monetary transaction is recorded, including investments made by the company. The taxes the company is liable for and whether there will be some rebate. In fact, the office accountants usually deal with every employee’s individual taxes as well. Very few of us have an in-depth idea about our tax break down. Now imagine how many employees there are in the office. Each one has a different tax profile, with different tax saving policies adopted. Calculating all those taxes is really a taxing job!

Management accounting is very different from financial one. In the financial accounting segment, most of the information needs to be sent outside the company like to the shareholders and tax office. While the financial accounting deals with hard facts and figures, the management kind deals with speculation. That is not to say that these are all guesswork. The speculation is based on the past as well as present trends in the market. Now this does involve a little bit more of instinct. Whenever, you are about to predict what is going to happen, uncertainties creep in.

When you are opting for accounting outsourcing know that, some people have a natural instinct as well as a solid ground of experience to predict accurately and making business decisions based on that. Others are not so talented. Keep that in mind when you are outsource accounting.

Unicorn Accounting is an accounting outsourcing company that excels in all sections of accounting. When you choose outsource accounting with them, you get the benefit of diversification without the burden of employing a large team.