Accounting is a diverse field broadly categorized by its purpose and intended audience. While all types rely on the same fundamental data, they process and present that information differently to meet specific user needs. The two main overarching divisions are Accounting Services in Knoxville and Management Accounting.
1. Financial Accounting (External Focus)
This is the most well-known type, governed by strict standards (like GAAP or IFRS). Its primary purpose is to provide standardized, historical financial information to users outside the company.
Audience: Investors, creditors, regulatory bodies (like the SEC), and suppliers.
Purpose: To give external stakeholders a reliable picture of the company’s financial health and performance.
Output: The three primary Financial Statements: the Balance Sheet, the Income Statement, and the Statement of Cash Flows.
Key Characteristic: Focuses on historical data (what has already happened) and requires external verification (auditing).
2. Management (or Managerial) Accounting (Internal Focus)
This type is concerned with providing tailored financial information to users inside the company to aid in decision-making, planning, and control. It is not bound by external accounting rules.
Audience: Internal managers, executives, and department heads.
Purpose: To help run the business more efficiently, control costs, and set pricing.
Output: Internal reports, Budgets, performance reports, Cost-Volume-Profit (CVP) analysis, and variance analysis.
Key Characteristic: Focuses on future-oriented data (forecasting, budgeting) and detailed Bookkeeping Services in Knoxville.
