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What Are The Different Types Of Accounts In Accounting?

What Are The Different Types Of Accounts In Accounting?

Introduction

Till now​, ​the​ ​accountants​ ​have​ ​been​ ​following​ ​the conventional​ ​way​ ​of​ ​entering​ , ​maintaining​ ​all​ ​the transaction​ ​details​ ​and​ ​records​ ​manually​ ​in​ ​large-sized​ ​books​. It​ ​created ​ ​havoc​ ​when​ ​older data​ ​was​ ​needed​ ​to​ ​be​ ​retrieved​ ​and​ ​the​ ​bunch​ ​of​ ​pages​ ​needed​ ​to​ ​be​ ​flipped​ ​to​ ​get​ ​the​ ​data​ ​of that​ ​particular​ ​day​, ​for​ ​instance​, ​three​ ​years​ ​back​.

It ​has​ ​not​ ​only​ ​increased​ ​the​ ​manual​ ​efforts​ ​of the​ ​accountants​ ​but​ ​also​ ​degraded​ ​the​ ​efficiency​ ​of​ ​the​ ​performance​ ​and​ ​efficiency​ ​of​ ​the accountant​, ​in​ ​addition​ ​to​ ​wasting​ ​time​ ​on​ ​unnecessary​ ​flipping​ ​of​ ​pages​.

​There​ ​is​ ​a​ ​need​ ​for​ ​an​ ​assistant​ that can ​ease​ ​the​ ​manual​ ​efforts​ ​of​ ​the​ ​accountants​ ​by making​ ​all​ ​the​ ​calculative​ ​processes​ ​of​ ​storing​ ​the​ ​transactions​ ​an​ ​automated​ ​process​, ​and hence​ ​the​ ​need​ ​for​ ​​ ​software​ ​for​ ​accounting​ ​arouse​.

​The​ ​software​ ​should​ ​calculate​ ​all​ ​the transactions​ ​of​ ​the​ ​company​ ​within​ ​a few​ ​seconds​, ​and​ ​provide​ ​efficient​ ​and​ ​relevant​ ​results​ ​as and​ ​when​ ​required​. It​ ​also​ ​means​ ​the​ ​storage​ ​of​ ​the​ ​previous​ ​years​’ ​data​ ​should​ ​be​ ​available​. If​ ​one​ ​wants​ ​to​ ​retrieve​ ​the​ ​data​ ​of​ ​3​ ​years​, ​just​ ​with​ ​a​ ​few​ ​filters​ ​added​, ​he​ ​should​ ​be​ ​able​ ​to​ ​get a​ ​complete​ ​report​ ​of​ ​the​ ​same​.

Even​ ​if​ ​there​ ​is​ ​a​ ​team​ ​of​ ​accountants​ ​working​ ​in​ ​a​ ​company​, ​maintaining​ ​a​ ​large​ ​number​ ​of data​​ manually​ ​is​ ​impossible​​ these ​​days.​ ​Hence​,​the ​​accounting​​ software ​​will ​​help​ ​them in simplifying​ ​all​ ​the​ ​business​ ​processes,​ ​by​ ​carrying​ ​out​ ​crucial​ ​tasks​ ​like​ ​managing​ ​the​ ​billing details​ ​of​ ​the​ ​transactions​ ​carried​ ​out​ ​in​ ​a​ ​particular​ ​span​, ​etc​.

The​ ​major​ ​benefits​ ​of​ ​using​ ​accounting​ ​software​ ​for​ ​a​ ​company​ ​are​ ​perfect​ ​results​, ​more accuracy​, ​time​-​saving​, ​reduced​ ​cost​, ​improvement​ ​in​ ​the​ ​decision​-​making​ ​process​, ​less frustration​ ​for​ ​bill​ ​payments​, ​tax​ ​filing​, ​periodic​ ​report​ ​generation​, ​etc.​

One​ ​of​ ​the​ ​efficient​ ​software​, ​Gross​ ​Accounts​, ​is​ ​specially​ ​designed​ ​and​ ​developed​ ​for​ ​the professionals​ ​like​ ​accountants​, ​startup​ ​entrepreneurs​, ​business​ ​owners​, ​etc​., ​that​ ​contains​ ​the latest​ ​features​ ​one​ ​can​ ​expect​ ​from​ ​accounting​ ​software​. ​One​ ​can​ ​manage​ ​the​ ​invoicing​ ​and accounting​ ​process​ ​smoothly​. ​Reminders​ ​to​ ​collect​ ​or​ ​release​ ​the​ ​payments​ ​can​ ​also​ ​be​ ​set​ ​in the​ ​software​.

​In​ ​short​, ​the​ ​developers​ ​of​ ​the​ ​software​ ​mainly​ ​focus​ ​on​ ​the​ ​customers​’ ​approach towards​ ​buying​ ​the​ ​relevant​ ​software​ ​for​ ​their​ ​company​ ​and​ ​provide​ ​maximum​ ​features​ ​possible at​ ​the​ ​lowest​ ​cost​ ​possible​.

But​, ​before​ ​we​ ​take​ ​a​ ​deep​ ​dive​ ​into​ ​what​ ​Gross​ ​Accounts​ ​offer​ ​to​ ​ease​ ​the​ ​workload​ ​of​ ​the accounting​ ​professionals​ ​of​ ​the​ ​company​, ​let​ ​us​ ​discuss​ ​the​ ​basics​ ​of​ ​accounting​ ​and​ ​what​ ​the types​ ​of​ ​accounts​ ​available​ ​are​.

Also See: How Does An Accounting Software Manages Your Sales & Taxes?

What​ ​Is​ ​Accounting​?

The​ ​process​ ​that​ ​records​ ​classify​, an​ nd​ ​summarizes​ ​the​ ​transactions​ ​of​ ​funds​ ​in​ ​an​ ​appropriate and​ ​in​ ​a​ ​manner​ ​such​ ​that​ ​they​ ​are​ ​interpretable​ ​is​ ​known​ ​to​ ​be​ ​accounting​. ​One​ ​can​ ​say​ ​the concept​ ​of​ ​accounting​ ​as​ ​a​ ​mixture​ ​of​ ​science​ ​as​ ​well​ ​as​ ​art​.

To​ ​manage​ ​one​’​s​ ​business​ ​operations​, ​whether​ ​larger​ ​or​ ​smaller​ ​in​ ​size​, ​accounting​ ​is​ ​a mandatory​ ​process​ ​as​ ​it​ ​maintains​ ​all​ ​the​ ​minute​ ​details​ ​of​ ​a​ ​business​ ​process​, ​and​ ​hence managing​ ​these​ ​procedures​ ​becomes​ ​an​ ​easy​ ​task​. ​A​ ​professional​ ​accountant​ ​is​ ​one​ ​who occupies​ ​sound​ ​knowledge​ ​of​ ​all​ ​the​ ​terminologies​ ​and​ ​definitions​ , ​in​ ​addition​ ​to​ ​the​ ​types​ ​of accounts​ ​available​.

Accounting​ ​can​ ​be​ ​useful​ ​in​ ​planning​ ​the​ ​annual​ ​budget​, ​deciding​ ​the​ ​options​ ​for​ ​further investments​, ​determining​ ​the​ ​annual​ ​expenditure​ ​and​ ​how​ ​can​ ​one​ ​cut​ ​the​ ​extra​ ​cost​, ​etc​. ​Some of​ ​the​ ​basic​ ​tasks​ ​of​ ​accounting​ ​can​ ​be​ ​handled​ ​by​ ​a​ ​freshman​ ​in​ ​accounting​, ​where​ ​the complex​ ​tasks​ ​can​ ​be​ ​handled​ ​by​ ​an​ ​accountant​ ​who​ ​is​ ​a​ ​professional​ ​and​ ​designated​ ​as​ ​a Certified​ ​Public​ ​Accountant​.

There​ ​is​ ​a​ ​classification​ ​among​ ​accounting​ ​methods​, ​known​ ​as​ ​Managerial​ ​and​ ​Cost​ ​Accounting, respectively​. ​The​ ​managerial​ ​accounting​ ​team​ ​helps​ ​the​ ​management​ ​of​ ​the​ ​company​ ​in​ ​taking large​ ​business​ ​decisions​, ​whereas​, ​the​ ​cost​ ​accounting​ ​team​ ​interprets​ ​the​ ​cost​ ​of​ ​the​ ​business product​ ​based​ ​on​ ​profits​ ​and​ ​losses​ ​incurred​ ​previously​.

​ ​Accounts​​ can​ ​be​ ​depicted​ ​as​ ​a​ ​systematic​ ​arrangement​ ​of​ ​the​ ​company​’​s transactions​ ​for​ ​a​ ​particular​ ​business​ ​process​. ​These​ ​transactions​ ​include​ ​the​ ​records​ ​for​ ​a particular​ ​client​ ​even​. ​Not​ ​only​ ​for​ ​the​ ​clients​, ​but​ ​these​ ​records​ ​can​ ​be​ ​well​ ​maintained​ ​for intangible​ ​things​ ​like​ ​land​, ​furniture​, ​constructions​, ​etc​.

A​ ​perfect​ ​representation​ ​of​ ​the​ ​account​ ​has​ ​two​ ​columns​ ​, or​ ​we​ ​can​ ​say​ ​sides​, ​where​ ​the​ ​left​ ​one is​ ​known​ ​for​ ​the​ ​Debits​ ​and​ ​the​ ​right​ ​one​ ​for​ ​the​ ​Credits​, ​which​ ​are​ ​denoted​ ​as​ ‘​Dr​’ ​and​ ‘​Cr​’ respectively​.

Accounting​ ​is​ ​further​ ​classified​ ​into​ ​various​ ​types​, ​which​ ​you​ ​can​ ​find​ ​in​ ​the​ ​next​ ​section​.

Recommended For You: Why Accounting Software Is Important For Your Business?

Types​ ​Of​ ​Accounting​

The​ ​area​ ​of​ ​accounting​ ​is​ ​classified​ ​into​ ​eight​ ​subcategories​, ​which​ ​can​ ​be​ ​a​ ​specialization​ ​area of​ ​a​ ​professional​ ​accountant​. ​These​ ​categories​ ​are​ ​discussed​ ​further​.

1)​ ​Financial Accounting

This​ ​category​ ​records​ ​and​ ​categorizes​ ​all​ ​business​ ​transactions​. ​Also​, ​most​ ​of​ ​the​ ​data​ ​entered would​ ​be​ ​of​ ​the previous​ ​year​, ​month​, ​or​ ​a​ ​week​’. ​It​ ​might​ ​also​ ​help​ ​the​ ​accountant​ ​to​ ​provide financial​ ​statements​ ​like​ ​account​ ​statements​, ​balance​ ​sheets​, ​etc​. ​Also​, ​this​ ​category​ ​helps to make​ ​major​ ​financial​ ​decisions​ ​in​ ​the​ ​company​.

2) ​Cost Accounting

Considered​ ​as​ ​a​ ​part​ ​of​ ​Managerial​ ​accounting,​ ​this​ ​is​ ​used​ ​in​ ​companies​ ​where​ ​there​ ​are​ ​a large​ ​number​ ​of​ ​inward​ ​and​ ​outward​ ​flows​ ​of​ ​money​. ​Cost​ ​accounting​ ​manages​ ​the​ ​internal transactions​ ​of​ ​the​ ​company​, ​unlike​ ​financial​ ​accounting​. ​The​ ​basic​ ​operational​ ​procedure​ ​in cost​ ​accounting​ ​is​ ​to​ ​decide​ ​the​ ​cost​ ​of​ ​the​ ​manufacturing​ ​process​, ​final​ ​product​, ​etc​. ​for​ ​the company​ ​based​ ​on​ ​the​ ​previous​ ​financial​ ​transactions​.

3)​ ​Auditing

The​ ​Auditing​ ​process​ ​is​ ​further​ ​divided​ ​into​ ​two​ ​parts​: ​internal​ ​and​ ​external​ ​auditing​. ​A​ ​third party​ ​carries​ ​out​ ​the​ ​external​ ​auditing​ ​to​ ​check​ ​the financial​ ​data​ ​of​ ​the​ ​company​, ​making​ ​sure​ ​that they​ ​are​ ​well​ ​maintained​ ​according​ ​to​ ​the​ ​rules​ ​and​ ​regulations​ ​levied​ ​by​ ​GAAP​.

Internal​ ​auditing​ ​is​ ​an​ ​inspection​ ​that​ ​confirms​ ​that​ ​the​ ​business​ ​has​ ​divided​ ​the​ ​accounting roles​ ​amongst​ ​its​ ​team​ ​and​ ​what​ ​procedures​ ​and​ ​policies​ ​need​ ​to​ ​be​ ​followed​ ​by​ ​the​ ​accounts team​.

4)​ ​Managerial Accounting

The​ ​basic​ ​task​ ​is​ ​to​ ​provide​ ​the​ ​details​ ​of​ ​the​ ​operations​ ​carried​ ​out​ ​in​ ​the​ ​company​ ​to​ ​its management​ ​team​.

​The​ ​data​ ​represented​ ​to​ ​the​ ​management​ ​may​ ​or​ ​may​ ​not​ ​be​ ​arranged according​ ​to​ ​what​ ​is​ ​mentioned​ ​in​ ​GAAP​. Still, it​ ​is​ ​represented​ ​in​ ​such​ ​a​ ​manner​ ​that​ ​the managers​ ​can​ ​make​ ​decisions​ ​for​ ​the​ ​upcoming​ ​process​ ​efficiently​.

5) ​Accounting Information Systems

AIS​ ​has​ ​every​ ​task​ ​related​ ​to​ ​accounts​ ​managing​ ​the​ ​accounting​ ​software​ ​and​ ​the​ ​details​ ​of​ ​the transactions​ ​to​ ​be​ ​stored​ ​in​ ​it​.

6) ​Tax Accounting

Tasks​ ​like​ ​planning​ ​for​ ​tax​ ​filing​ ​and​ ​returns​ ​are​ ​included​ ​in​ ​this​ ​type​ ​of​ ​accounting​. ​This category​ ​of​ ​accounting​ ​assures​ ​that​ ​the​ ​business​ ​transactions​ ​made​ ​are​ ​complaint​ ​and according​ ​to​ ​the​ ​rules​ ​and​ ​regulations​ ​of​ ​the​ ​IRS​.

Hence​, ​this​ ​category​ ​covers​ ​all​ ​the​ ​tax-related​ ​transactions​ ​and​ ​relevant​ ​decision​-​making processes​ ​in​ ​an​ ​organization​.

7) ​Forensic Accounting

Inquiries​​ in ​​case​​ of ​​frauds​,​legal ​​procedures ​and ​​cases​ in resolving ​​claims​​ and ​​disputes​,​etc​.​are the​ ​task​ ​included​ ​in​ ​Forensic​ ​Accounting​.

In​ ​case​ ​of​ ​missing​ ​data​, ​forensic​ ​accounting​ ​has​ ​the​ ​task​ ​of​ ​completing​ ​it​ ​and​ ​making​ ​it​ ​can represent​. ​The​ ​professionals​ ​of​ ​Forensic​ ​Accounting​ ​are​ ​not​ ​hired​ ​permanently​ ​by​ ​any company​; rather,​ ​they​ ​work​ ​on​ ​a​ ​project​ ​basis​.

8) ​Fiduciary Accounting

It​ ​involves​ ​property​ ​management​ ​for​ ​third​ ​party​ ​business​. ​It​ ​merges​ ​the​ ​accounts​ ​of​ ​the admin​ ​and​ ​the​ ​guardian​ ​of​ ​the​ ​property​ ​as​ ​and​ ​when​ ​required. So​ ​these​ ​were​ ​the​ ​accounting​ ​types​ ​followed​ ​by​ ​the​ ​professionals​ ​in​ ​a​ ​company​. ​Now​ ​let​ ​us discuss​ ​how​ ​Gross​ ​Accounts​ ​can​ ​help​ ​one​ ​in​ ​maintaining​ ​these​ ​accounts​. Gross Accounting Software manages all types of accounting.

Gross Accounting Software is meant for the GST billing and filing process, but it also covers major accounting features required in a company.

In a one-time cost, the software manages all the business transactions of a company. Sending invoices, tracking order purchase or sale, reminders for collecting or releasing payments, tallying the previous transactions, tracking all the business expenditures, inventory management, etc. are some of the basic features of this software.

To get a perfect analysis of the business performance over a periodic span, the software can also provide the GSTR report, helpful in the further decision-making process.

This software is a one-stop solution for all sectors of business, whether large sized or small, whether developed or startup, distributors, retailers, traders, job working units, manufacturing units, etc.

An accountant can be assured in the process of efficient, complete, and accurate financial reports generated from the software, a foolproof document helpful in the further decision-making process while using the smoothly executing Gross Account software.

Summarizing the above features and advantages of Gross Accounting software, the following points can be considered for the same:

  • ​ ​Easy to use
  • ​ ​GST related tasks on the go
  • ​ ​Dedicated customer support
  • ​ ​No training required to learn the software
  • ​ ​Can take the back up of the stored data automatically
  • ​ ​Reduced cost
  • ​ ​Reminders for payment
  • ​ ​Can import data from spreadsheets
  • ​ ​Inventory management
  • ​ ​Foolproof financial reports can be generated.

Conclusion

In this blog, we came across the basic concepts of Accounting, the role of an accountant and the requirement of accounting software, types of Accounting, and how the Gross Accounting software can help manage all the business transactions. I hope this information helps.

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