Principles Of Accounting And Accountant Assumptions

Discovering the 4 Types of Accounting

Multiple types of accounting careers exist within the financial industry, with each performing a differing range of functions. Branches of accounting vary based on the employment setting, range of responsibilities and daily activities, types of available advancement, and other factors. This article will break down various types of accounting and their careers into four broad categories. Though different professional accounting sources may divide accounting careers into different categories, the four types listed here reflect the accounting roles commonly available throughout the profession. These four branches include corporate, public, government, and forensic accounting. An undergraduate degree is most often required for any accounting career, while previous master’s work, especially in the accounting field, is often strongly preferred. Below, we’ll explore the nuances of each common area of accounting.

Corporate Accounting

Overview: According to a summary published by, corporate accounting involves the use, handling, and filing of a company’s financial data often for the purpose of external reporting and tax compliance. To accomplish their role, corporate accountants must be well apprised of certain widely held accounting methodologies to maintain accurate records and to keep their financial and tax submissions in compliance with appropriate rules, regulations, and standards. A few of these common types of accounting principles, standards, and procedures include Generally Accepted Accounting Principles (GAAP), and International Financial Reporting Standards (IFRS) and the Internal Revenue Code (IRC).

Jobs Possible: The types of jobs in which someone might be involved in corporate accounting often involve external reporting. This could include working with the financial statements a corporation or preparing their tax filings. Executive positions such as financial controllers, analysts, and Chief Financial Officers (CFO’s) are also considered financial accounting roles. Many traditional financial accounting positions include managerial responsibilities.

Public Accounting

Overview: Public accountants work with external clients, most often companies, corporations, or individuals. Their responsibility to clients is to help ensure their financial statements, records, and filings are accurate. Public accountants often work closely with tax regulations and financial reporting and must maintain an up-to-date knowledge of both GAAP and the tax code. They must also understand, and be able to apply, industry-standard accounting frameworks and best practices. Public accountants must possess strong problem-solving skills and attention to detail. Excellent people skills are also key, to effectively interact with clients.

Jobs Possible: Public accounting positions are found in public accounting firms that serve external clients. Clientele could range from small local firms that serve individuals and small businesses to international corporate conglomerates that serve multi-billion-dollar companies. Public accountants can advance into management positions at a team or company-wide level, depending on the nature of the firm. Public accounting work can also often lead to leadership positions within their firms.

Government Accounting

Overview: Government accountants work within the context of local, state, or federal government entities. They often work within frameworks that differ from those employed by public accountants. Government accountants are also often more strictly vetted, and in some positions will be responsible for keeping privileged or confidential information.

Jobs Possible: Government financial professionals perform a wide range of duties. They might audit private documentation or tax submissions, maintain the financial records of government branches or bodies, or manage government resources. OneWire Resources, a resource for financial professionals, warns that government positions may not be as highly compensated as comparable positions in the private sector. However, government positions offer certain perks and advantages that can offset lower earning power. According to a comparison by, government jobs often offer substantially better educational, insurance, healthcare, and retirement benefits than many civilian jobs.

Forensic Accounting

Overview: Forensic accounting refers to a branch of accounting that collects, recovers, and reconstructs financial data when it is difficult or impossible to obtain. In addition to understanding accounting principles and practices, forensic accountants must be resourceful, creative, and able to solve often-complex problems. A sample job listing for a forensic accountant from the Federal Bureau of Investigation (FBI) stresses the importance of collaboration, communication, and investigative skills. Previous coursework in law, or related experience, is also often attractive to potential employers in this field.

Jobs Possible: Forensic accounting positions can vary widely. Some forensic accountants are employed by larger law firms while others are employed by legislative entities. Government agencies including the FBI, the IRS, and beyond also employ forensic accountants. Still, other forensic accounting professionals prefer to be self-employed and work on a contract basis for corporations, insurance companies, and other private entities.

An accounting professional may choose from a wide range of employment scenarios and desired amenities to match their ideal career situation. Options include fast-paced positions that change often and may feature significant travel, to more standard positions that provide stable working conditions and responsibilities. Career choices may include roles that require significant teamwork and interpersonal interaction to positions that are primarily data-oriented which might require minimal outside personal contact.

Industry & commerce

The success of an industrial or commercial concern is very much tied up with economics, i.e. budgeting, cash flow, cost control and accounting systems.

Director, company secretary, chief accountant, chief executive, financial adviser, management accountant and internal auditor are just a few of the possible job titles for accountants in industry or commerce.

Accountants in industry form an important part of the management team. Sophisticated computer systems are widely used to store and analyse financial information quickly and accurately.


This area is concerned with keeping records of monetary transactions. Tasks include the setting up and supervision of a firm’s internal audit, preparing the accounts and reports for directors, protecting the firm’s assets and investments, and preparing share prospectuses in order to raise new capital. Wages, salaries, taxation, expenditure and invoices are also handled in this section.


Budgetary control, forecasting needs and expenditure monitoring are the main tasks. The work may also include analysing and comparing costs, explaining financial information to non-financial managers and preparing management reports.

To cost a job, service or operation, calculations must include a price element covering labour, materials, machinery, buildings and fuel.


Treasury management involves sophisticated financial housekeeping; for instance, ensuring the best borrowing rates, keeping stock-piling and debts to a minimum, streamlining invoicing procedures and investing the firm’s money. Tax management and pension fund management can also be separate jobs.

Accountants trained in industry and commerce can do similar work in public services (e.g. local or national government) or move sideways into fields such as management consultancy.

How Financial Accounting Differs From Managerial Accounting

Financial accounting and managerial accounting are two of the four largest branches of the accounting discipline (tax accounting and auditing are the others). Despite many similarities in approach and usage, there are significant differences between the two. These differences center around compliance, accounting standards, and target audiences.

Main Objectives of Both Accounting Practices

The main objective of managerial accounting is to produce useful information for a company’s internal use. Business managers collect information that encourages strategic planning, helps them set realistic goals, and encourages an efficient directing of company resources.

Financial accounting has some internal uses as well, but it is much more concerned with informing those outside of a company. The final accounts or financial statements produced through financial accounting are designed to disclose the firm’s business performance and financial health. If managerial accounting is created for a company’s management, financial accounting is created for its investors, creditors, and industry regulators.

Past and Present Use

The information created through financial accounting is entirely historical; financial statements contain data for a defined period of time. Managerial accounting looks at past performance and creates business forecasts. Business decisions should be informed by this type of accounting.

Investors and creditors often use financial statements to create forecasts of their own. In this way, financial accounting is not entirely backward-looking. Nevertheless, no future forecasting is allowed in the statements.

Understanding an Accounting Method

All businesses need to keep accounting records. Public companies are required to do so. Accounting allows a business to monitor every aspect of its finances, from revenues to costs to taxes and more. Without accurate accounting, a business would not know where it stood financially, most likely resulting in its demise.

Accounting is also needed to pay accurate taxes to the Internal Revenue Service (IRS). If the IRS ever conducts an audit on a company, it looks at a company’s accounting records and methods. Furthermore, the IRS requires taxpayers to choose an accounting method that accurately reflects their income and to be consistent in their choice of accounting method from year to year.

This is because switching between methods would potentially allow a company to manipulate revenue to minimize their tax burdens. As such, IRS approval is required to change methods. Companies may use a hybrid of the two methods, which is allowable under IRS rules if specified requirements are met.

Cash Accounting

If you’re a business owner, adopting the cash accounting enables you to focus only on corporate transactions involving cash. Other economic events — those with no monetary input — don’t matter because they don’t make it into financial statements. Under the cash accounting method, a corporate bookkeeper always debits or credits the cash account in each journal entry, depending on the transaction. To record customer remittances, for example, the bookkeeper debits the cash account and credits the sales revenue account. Don’t mistake an accounting cash debit for a banking debit. The former means an increase in company money, whereas the latter reduces funds in a client’s account.

Accrual Accounting

Under the accrual method of accounting, a company records all transactional data, regardless of monetary inflows or outflows. In other words, this accounting type incorporates the cash accounting method, but goes beyond it to take into account all transactions making up a corporation’s operating activities. In a financial dictionary, “accruing” means accumulating an item and recording it as legally binding even though no cash payment takes place. The phrases “accounts payable” and “accounts receivable” perfectly illustrate the concept of accrual. Accounts payable — also known as vendor payables — represent money a business owes vendors at a given point in time. The entity accrues the payables until it settles the underlying debts. The same analysis applies to customer receivables — the other name for accounts receivable — which represents money clients owe a business.

Bookkeeping Fees Can Save You Money

Online Bookkeeping Jobs: Turn Your Love For Money Into Money

Are you good with numbers? Do you like getting immersed in all kinds of details? Are you into things like solving puzzles and untangling knots? If you answered yes to any of these questions, you might be interested in being an at-home bookkeeper.

I’ve already shared that bookkeeping is a great career to have because the skills are considered entry-level and it’s the kind of work that easily adapts to working from home. These days, more and more businesses are hiring at-home bookkeepers. And while there’s definitely a solid niche for starting your own bookkeeping business, freelancing is certainly not the only way to do it. You can also find remote work as a bookkeeper for a company in a more traditional employment model.

What do Bookkeepers Do?

While bookkeeping is part of the accounting process, it’s much more about staying on top of the clerical tasks as opposed to analyzing reports, preparing taxes and setting budgets. A bookkeeper is often the person inputting the receipts and invoices, counting inventory, classifying expenses and income.

Because your scope is somewhat limited as a bookkeeper, you often don’t need an accounting degree. That being said, there are a few skills and personality traits that are absolutely imperative:

  • You need to be organized
  • You must have strong attention to detail. If you don’t like double-checking, or triple-checking, your work, this might not be the job for you.
  • You need to be a hard worker.
  • You need to be able to handle multiple projects at once. You will probably have more than one client.
  • You must be compassionate and personable. To be a successful online bookkeeper, you need to be able to make a connection with your clients. They need to be able to trust you with their finances.

How Much do Online Bookkeepers Make?

As with most freelance opportunities, it depends. If you are working for a large company or accounting firm, they will likely dictate your earnings.

If you decide to start your own bookkeeping business, you can probably earn a lot more as you are taking on more of the responsibilities. According to Bookkeeper Launch, many of their graduates are earning upwards of $60 per hour working from home.

What Types of Work Do Bookkeepers Do?

Bookkeeping is a back-office position required in almost every industry, so there’s the built-in advantage of being able to work in virtually any field. Once you’re trained in bookkeeping, you can work within many different industries and find work that interests you, whether it’s working with small business owners, bloggers, or even non-profits — every industry needs bookkeepers.

Common tasks often include:

  • Entering and managing accounts payable
  • Entering and managing accounts receivable
  • Maintaining the general ledger
  • Managing inventory counts
  • Overseeing payroll
  • Monitoring project budgets
  • Filing accounting reports
  • Paying suppliers and following up on purchase orders
  • Monitoring petty cash


If you love work from home or working remotely, then work from home bookkeeping will help you to earn money online and compete with the highest paying work from home jobs and home businesses.

To give you more precise guidelines on bookkeeping as a work from home job, here are the effective points you can follow step-by-step:

1. Get Certified

The fastest and easiest way to get clients is to become certified. A certified bookkeeper is always preferred by the clients. Therefore, before expecting clients, get the certification to impress your potential customers and then catch the project by convincing them with your conversational skills.

2. Make a Business Plan

When I Googled ‘how to make a business plan’ a few years ago I was totally overwhelmed by the amount of information they convinced me to put into it. To start with, create a basic business plan, but be sure to re-visit it every quarter and flesh it out as your self-employed bookkeeping business scales and grows. It will invariably be of benefit to strategize your business.

3. Select a Business Name and Structure

Just as you cannot imagine your identity without your name, your business also requires a name to be identified as a brand. Choose an appropriate name related to your job – you can create something with your city name to help target your local area, or if you’re more of a freelancer a name that’s more objective related. It’s totally up to you.

In terms of business structure, there are various types of business structure including Personal or Sole Proprietorship, Partnership, Limited Liability Company and Corporation.

All these types have different requirement and terms. Make sure that you are choosing the right option according to your business.

In addition, to assist you further in this matter, we suggest you consult with a lawyer and/or an accountant, who will guide you on the right track.

4. Set up a Business Bank Account

Keep business and personal separate! Until that joyful time comes when you pay yourself. I love payday.

Before taking projects from clients, open a business account. Don’t be like the divorced relationship councillor or the overweight personal trainer. As a bookkeeper set a good example and sort this stuff out from day dot.

5. Bookkeeping Software

In starting your work from home bookkeeping online business no doubt you will have decided to invest in some bookkeeping software. There are stacks of options to choose from; however, opting for a top-class one will be the best investment for your job. Start your research by asking Google and filter the search results wisely to get the appropriate one.

6. Get Your Business E-mail ID

A business email address is essential in order to be seen as professional to prospective clients, so it’s important to get your domain name from the beginning. And for postal inquiry (if that still exists), you have to put the address of your office. It might be your home or be any rented place. The above is a list of some of the technical requirements needed to get things up and running. From there it’s time to start thinking about marketing and listing your services, attracting clients and delivering your world class bookkeeping service so you can enjoy bookkeeping from the comfort of your home!

Benefits of a Virtual Bookkeeping Job


A good computer and high-speed internet should be your first investments. Also crucial to a being a virtual bookkeeper is accounting software, such as Quickbooks Online, which keeps startup costs low.

And then there’s that $60-per-hour pay rate.

The average full-time bookkeeper earns nearly $40,000 per year (almost $19/hour), according to the U.S. Bureau of Labor Statistics reports. But pointed out that as a freelancer or contractor, you can actually earn a higher hourly rate while working fewer hours.You must know how to provide true value to clients — that real-world problem-solving we talked about — to command this kind of income.

Can anyone who knows how to use a calculator make money as a work-from-home bookkeeper?

Using a calculator is such a small part of bookkeeping. It’s more like a giant puzzle and figuring out where each piece goes. The catch is that you have to know where to put each piece; it isn’t as simple as some would have you believe. There are nuances that you don’t know you don’t know… does that make sense? Basically, you need help along the way to ensure you are ready to take on a client and not mess up their books!

Love that concept! When you decided to start learning to become a bookkeeper, what was going through your mind?

Well try to learn it on my own and failed miserably. I should mention here that I am usually the type of person that can teach myself anything… guitar, violin, bass, piano, crochet, knitting, oil painting, languages, etc. But for some reason, this just wasn’t clicking.

Did you know everything going in? If not, were you able to grow and add skills you didn’t know?

Haha, I knew NOTHING going in. I had tried to do my own bookkeeping as a VA, but it was just a mess because I had no idea what I was doing. On the business side of things, I knew the basics of having a business, but not a successful one. I had no clue how to find clients or market at all.

The course taught me everything I needed to know. From Day 1 I was learning new skills all the way through the end of the course. And to be honest, the learning hasn’t stopped!

Income Tax Preparation

Tips to Find the Best Tax Preparer Near You

Ask for a Preparer Tax Identification Number

The IRS requires anyone who prepares or assists in preparing federal tax returns for compensation to have a PTIN. Note the phrase “for compensation” — volunteer preparers don’t need PTINs. Make sure your income tax preparer puts his or her PTIN number on your return — the IRS requires that, too.

Require a CPA, law license or Enrolled Agent designation

A PTIN is relatively easy to get, so go a step further and get a credentialed preparer — someone who’s also a certified public accountant, licensed attorney, enrolled agent or who has completed the IRS’ Annual Filing Season program. The Accredited Business Accountant/Advisor and Accredited Tax Preparer are examples of programs that help preparers fulfill the Annual Filing Season Program requirement. These credentials all require varying amounts of study, exams and ongoing education.

Look for friends in high places

Membership in a professional organization such as the National Association of Tax Professionals, the National Association of Enrolled Agents, the American Institute of Certified Public Accountants, or the American Academy of Attorney CPAs is always a good thing to have, as most have codes of ethics, professional conduct requirements and various certification programs.

Reconsider those who don’t e-file

The IRS requires any paid preparer who does more than 10 returns for clients to file electronically via the IRS’ e-file system. If your tax preparer doesn’t offer e-file, it may be a sign the person isn’t doing as much tax prep as you thought.

Tips to Find a Good Tax Preparer

Check the Tax Preparer’s Credentials

Anyone with a preparer tax identification number can handle and file your taxes, but it’s best to find someone who also can handle audits, a CPA and tax manager at Only a certified public accountant or an enrolled agent—another type of tax professional—can represent you before in those situations, she notes.

Look for a Well-Established Pro

Ideally, it’s a good idea to find a preparer who has had at least seven to 10 years of experience, The reason: The more time a preparer has been working on tax returns, the more likely he is to have dealt with a tax situation similar to yours.

Find a Preparer With Clients Like You

Ideally, you want a preparer with clients who are similar to you. That way, you’re more likely to get the best service for your particular needs.

Ask for a Price Quote

Often, a tax preparer will say that he can’t tell you what he’ll charge until he determines which forms you’ll need. But you can try to pin down an answer by presenting the forms you completed last year or by asking for a list of fees for various types of tax help.

How to Find the Best Tax Preparer for You

Types of Tax Return Pros

You can have anyone—your uncle, your neighbor, or your best friend—prepare your tax return. But if you’re paying for this service, the person must be registered with the IRS and have a current preparer tax identification number (PTIN), which is an IRS number issued annually to eligible preparers.

  • Attorneys: These professionals are licensed by states or state bar associations to practice law and are subject to continuing education requirements and a code of ethics.
  • CPAs: Certified public accountants are professionals who have passed the Uniform CPA Examination and been licensed by state boards of accountancy; they also have continuing education requirements.
  • Enrolled agents: These are individuals who have passed a three-part Special Enrollment Examination demonstrating competency in federal taxation and been licensed by the IRS. They, too, have continuing education requirements.
  • Annual filing season program participants: These individuals are not attorneys, CPAs, or enrolled agents but have completed an IRS program and obtained continuing education.
  • Any other preparer with a PTIN: These are individuals who believe they have sufficient knowledge to prepare returns and have paid the fee to obtain a PTIN. They are not subject to any oversight by a state, a professional board, or the IRS.

How to Choose a Tax Preparer

  • Payment. Try to get a clear understanding of the cost early in the process. You can minimize your costs by making sure your tax prep documents are well-organized and your accounting system is up-to-date.
  • Communication. Ask what is the best way to get in touch with the person in case you have a question or concern. Whether it’s text, email or phone, how soon can you expect to hear back?
  • Personal touch. Sometimes, you may be dealing with multiple people from the tax preparer’s office. It’s important to meet and talk with the person or people who will actually be handling your account.
  • Follow-up. Find out if your tax preparer will suggest ways for you to save on taxes next year or if he or she will contact you later if there are any new tax changes that could affect your business.
  • E-file. Make sure your preparer offers the IRS e-file option. Paid preparers who do taxes for more than 10 clients generally must file electronically.

Tips for Choosing a Tax Preparer

Verify the Preparer’s Credentials

There are a lot of people out there claiming to be a “tax professional.” However, just because someone hangs out a shingle and advertises tax prep services, it doesn’t mean they actually have the skill, education, and expertise to handle your return.

Check the Preparer’s Professional Record

You have to be able to trust your tax preparer. Afterall, he or she will know all about your finances and even have your Social Security number. And even if a preparer is credentialed, that doesn’t guarantee that he or she has a good professional reputation.

Ask About Fees

As with any other service or product you buy, make sure you have a good idea of the costs ahead of time. Prices for tax return preparation can vary widely depending on a variety of factors, including the complexity of your return, where you live, and the preparer’s experience. That’s why it’s important to get a quote before settling on a preparer.

Watch for Problems After Selecting a Preparer

Your due diligence doesn’t end after you pick a preparer. Watch out for warnings signs that something isn’t quite right. If one of these red flags pop up, you should seriously consider switching to another preparer right away.