Types of Accounting

Types of Accounting

There are two types of accounting:

Financial
Financial accounting is generally for outside, or third-party use. Thus, financial accounting emphasizes external reporting. Financial reporting for external purposes must be in accordance with generally accepted accounting principles. Financial reporting is usually concerned with transactions that have already occurred: that is, it is retrospective.

Managerial
Managerial accounting is generally inside or internal use. Managerial accounting as its title implies is used by managers. The planning and control of operations and related performance measures are common day-by-day uses of managerial accounting. Likewise, the reporting of profitability of services of services and the pricing of services are other common ongoing uses of managerial accounting.

Strategic planning and other intermediate and long-term decision making represent an additional use of managerial accounting.