An Ultimate Guide to Kinds of Accounting – In case you run a business, it is crucial to pay attention to accounting functions. Accounting is the life-saver of the business, no matter whether you build an in-house team for that or outsource accounting services. Just like you see the mirror before stepping out, the same way you could not overlook the accounts being an entrepreneur.
Accountants are the professionals that show the mirror. Accounting helps you know whether your company is making a profit as well as tell the key metrics like cash flow, the value of assets of the company, etc.
Types of Accounting
Even though accounting is a crucial function, most small business owners lack knowledge about accounting in Dubai, UAE. In case you are one of them, consider learning about the basic aspects of accounting like the kinds of accounting services. The list of types of accounting includes:
- Financial Accounting
It is the kind of accounting process that every business owner expects the accountants to perform: keeping track of financial transactions of the company. The accountants produce the financial reports with the use of certain procedures by globally or locally accepted accounting standards.
According to outgoings, liabilities, incomings as well as how money moves through the company, the accountants track the financial position of the company. The shareholders or the potential investors use the reports externally. The list of the company’s financial statements includes profit & loss account, cash flow statement, balance sheet, etc.
- Management Accounting
Management accounting is quite similar to financial accounting because the accountants prepare reports as well as track the financial position of the company. However, in this, the reports are used internally. The accountant provides the information that managers require for making informed business decisions.
For presenting data, the accountant might use statistical tools as well as techniques that might help in decision-making. It is worth noting that management accounting is about understanding trends, making predictions as well as considering the business’s qualitative and non-financial aspects.
- Tax Accounting
As the name suggests, tax accounting is all about determining the tax liabilities of the company like why and how much to pay. For this, business owners take the help of accountants and VAT consultants in Dubai. Businesses need to register for VAT in case supplies as well as imports exceed the prescribed limit. Tax accountants deal with interpreting multifaceted as well as constantly changing tax legislation.
They track the transactions that might influence the amount of tax that the company pays as well as calculate the due amount. It is important to note that VAT law requires the tax registrants for maintaining records for 5 years post the end of the tax period. The VAT consultants also help the companies in keeping the recording according to the VAT law.
- Cost Accounting
Cost accounting involves analysis of all the costs related to the production of output like fixed cost, input cost, etc. Understand, this analysis helps businesses make better decisions about inventory, spending as well as pricing. In this kind of accounting, the accountant would evaluate the costs first, and then they would compare such costs with the cost incurred by the company.
Apart from these, bookkeepers also handle the accounts payable. Usually, it is the bookkeeper who makes payment on the behalf of the business. It could include anything payment of expenses, supplier invoices, and petty cash. To ensure proper maintenance of financial records, consider hiring reputed and experienced professionals for bookkeeping services in Dubai.
This way, you could take remedial action. It is important to note that cost accounting is useful for management accounting. Through cost accounting reports, the managers could make better decisions for the business. The cost accounting links to the financial accounting as well because the date is often needed while compiling balance. Now, when you know about the accounting types, it is easier to outsource and understand the accounting services.