What Are the 12 Types of Accounting?

While you may already have a handle on your small business’s finances, the methods you use to track your expenses and income may differ from how other businesses do it. This is because there are several different types of accounting, each with its own specialized use.

What Are the 12 Types of Accounting?

Financial accounting involves recording and categorizing transactions for businesses, typically historical in nature. It provides insight into a company’s financial standing to creditors, investors, and tax authorities through reports such as the balance sheet and cash flow statement.

There are two primary forms of financial accounting: cash and accrual. The cash accounting method is the most basic: revenue and expense are recorded when money comes in and goes out payroll services. The accrual accounting method records revenue and expense based on the amount of work a company has performed regardless of whether or not money is actually paid for it.

Forensic accounting combines accounting, auditing and investigative skills to identify the financial evidence of a crime like fraud or embezzlement. It’s often used in legal proceedings such as a criminal case or lawsuit against a company or individual.

The going concern concept is an assumption that a business will be operating for a foreseeable future and will not be liquidated in the near future. It’s one of the most important concepts in accounting because it’s the basis for a company’s ability to show its assets on the balance sheet.