What Is Accounting? Types Of Accounting.

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Languages are used in the world since the beginning of Life on Earth and a medium is used to communicate among people which is called Language. Different languages are used in different parts of the word to communicate among peoples. Some of the most commons are English, Spanish, French, Hindi, and Arabic, etc. These all are used to communicate between different group of peoples those who understand them.

                                Likewise, there is a language that is used for the communication of business activity and which is called Accounting. Therefore Accounting is a business language that is used to record and analyze business transactions.
“It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities and owners’ equity.”

                            
People often misunderstood that Accounting is only related to a financial organization because they are involved in a heavy financial transaction. But this concept is not thoroughly true because the scope is accounting is much more vast then only this concept. Whether it is your home or school or a government agency if there is the involvement of money in their decisions accounting principles must apply there. As accounting principles help its users to take the most favorable decisions which are in the best interest of spending one's money.
                             
Accounting is widely divided into three types which are as follows
  • Financial Accounting
  • Cost Accounting
  • Managerial Accounting
FINANCIAL ACCOUNTING
Financial Accounting is a type of accounting that is mainly concerned with financial statements of organization, i-e it calculates profit and loss a company makes during his tenure and value of its assets and liabilities on a specific date ( End date of year).
COST ACCOUNTING
Cost accounting is concerned with calculating the cost of goods sold which includes all the expenditures to make such a particular product. It provides management cost-related information so that decisions are taken accordingly. For example, if a product is made of 5$ and cost management does not tell management about the cost of goods manufactured there is no way Management can decide its selling price.
MANAGERIAL ACCOUNTING
Managerial Accounting keeps an eye on all the accounting activities and provides accurate information to Management. It is a reproduction of financial Accounts in such a way as it will enable the management to take decisions and to control activities.

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