Types of Accounting Services and How They Work
Accounting plays a critical part in the success of any business by creating and maintaining thorough financial records and details about financial transactions.
It is one of the most important functions of all types of businesses. Common accounting functions include analyzing, summarizing, and reporting financial transactions to authorities and tax regulators.
A lot of companies choose to outsource accounting services in Malaysia because there are many different types of accounting services, so it is better that experienced and professional accountants handle such critical business functions.
The exact type of accounting used in an organization can greatly vary depending on the type of business.
Following are the major types of accounting services in Malaysia:
1. Cost Accounting
The purpose of cost accounting is to record the total manufacturing cost of a business. It involves calculating every fixed cost and variable cost of every production phase of a company. Typically, cost accounting calculates and analyzes the costs involved in any project or product.
A significant benefit of analyzing the total production cost of a company is facilitating the executives and top management to make smart business decisions. Furthermore, it is useful in the analysis of costs related to material, labour, and several other such expenditures.
2. Financial Accounting
Financial accounting includes analyzing, recording, and summarizing the financial transactions from various business operations for a fixed period of time.
The purpose of financial accounting is to prepare essential business and financial documents like the income statement, cash flow statement, and balance sheet.
3. Managerial Accounting
The management of a company uses managerial accounting to gather important financial information and make strategic business plans and decisions. The data contained in managerial accounting is from all different aspects and departments of an organization.
As a result, you can rely on this data for many different decisions related to cash flows, budgeting, and investments.
4. Tax Accounting
As the name suggests, tax accounting deals with the rules related to taxation. Generally, it is better to hire professional payroll and HR services to handle processes like tax accounting to ensure you are correctly calculating the tax and complying with the tax deadlines.
The primary focus of tax accounting is on tax evaluation instead of dealing with the annual financial statements of companies. Companies have to focus on implementing efficient tax accounting strategies to track funds properly and submit taxes on time to avoid any penalties
5. Forensic Accounting
Forensic accounting deals with the comprehensive analysis of financial transactions and documents of an organization.
It involves significant accounting and auditing knowledge and skills to ensure the finances of a company or an individual are evaluated to detect fraud and embezzlement.
6. External Auditing
External auditing is a type of forensic accounting. It involves inspection and analysis of a company’s financial documents by a third party like an audit firm or tax authority.
Professional accounting services in Malaysia facilitate companies to prepare for audits and ensure all the required financial documents are prepared for maximum compliance.
7. Accounting Information Systems
An accounting information system is a comprehensive accounting system used to collect, store, and process various types of financial and accounting data.
Most modern accounting systems are connected with various departments of a business, like a payroll department. Typically, professional accounting firms use such systems to efficiently manage important aspects like payroll and HR services and transfer pricing in Malaysia.
The benefit of using modern accounting systems is that they can handle various types of accounting. As a result, organizations can benefit from the efficiency of modern technology and significantly increase the productivity of accounting procedures.
8. Public Accounting
Public accounting is associated with businesses getting advice from professional accountants depending on their requirements. Such services can be obtained in numerous business procedures like auditing, tax returns, and specific accounting functions.
9. Governmental Accounting
Government accounting is conducted at a government level to allocate funds and resources between the local, state, or federal government.
The specific rules and regulations of governmental accounting vary from country to country and the overall structure of the government.
All in All
These are the most critical types of accounting. Different types of accounting serve different goals, but overall, there are some important similarities between them.
All accounting procedures must follow certain rules and international standards to cultivate the required results.
Accounting plays a critical role in financial analysis and reporting, so businesses in Malaysia should always prefer professional accounting services to handle the accounting functions and payroll and HR services in the best way possible.