Most people consider the subject of accounting to be very confusing and complicated. Accounting is not completely mathematics though some knowledge of school algebra is required. Accounting basically involved simple addition and subtraction done in the right method and accurately. It is not merely a confusing accumulation of numbers but rather a set of results displaying and keeping track of all business, personal and corporate financial transactions. Anyone involved in business finds it a necessity to keep track of his financial transactions which ultimately is done through accounting.
Accounting methods vary depending on the kind of calculations it keeps record of.
For example, private or industrial accounting is a track record of financial activities that is restricted to a single business firm. A private accountant is hired for providing his service and receives a monthly salary.
When the same service is rendered by an accountant to the general public, it is known as public accounting. The relationship is that of a practitioner and client. Public accounting service can be offered by both certified and non certified practitioners. It has the scope of local, national and international clientele and is also considered to be more professional than the private accounting service.
Accounting done for any kind of government related unit, federal, state or local level is called government accounting. It is not much different from the regular methods of accounting. All basic accounting system works on a double-entry system comprising of accounting and journal ledgers. Accounting done in this case is not a profit motive.
Fiduciary accounting is one based on the idea of trust. Such accounting is done by an administrator, a trustee, an executor or any person who is a trusted employee of the concerned business firm. The records kept by the accountant are authorized under the jurisdiction of a court of law. There exists no concept of proprietorship unlike other types of accounting.
When accounting uses the economic or social concept instead of business entity, it is called national income accounting. It helps provide an estimate of the GNP and Gross Annual Purchasing power, all of which are related to the nation.
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