What Are 3 Types of Accounting?

Management accounts are accounts that reflect and track the financial activities of the company. In bookkeeping, all financial transactions of a business, such as sales and purchases, cash paid payroll, sales orders, income taxes, and payments to vendors, are recorded. In accounting and bookkeeping, an account is considered open when it has a balance in the bank, or an equivalent institution. There are three types of accounts in accounting:

• Accounts receivable
• Accounts payable
• Accounts Balances

---

Accounts receivable represent outstanding obligations and accounts that are still in the process of being paid. These represent the sales of products or services. If you sell a product and a customer purchased it, you would balance accounts receivable. The difference between your sales and your inventory balances, is your receivable balance. When you make credit purchases, you will owe accounts payable. If your accounts payable balance is less than your receivable balance, then you have a deficiency balance.

• 
• 
• 

---

Accounts payable represent the sales of goods or services that are not yet paid for. It includes all the outstanding balances on your invoices or other sales documents. This balance is usually due at the end of the financial year. You need to determine the amounts of your sales and inventory levels in order to assess your accounts payable.

To determine your accounts receivable and accounts payable, you need to know the last sale date for each line item in your business. You need to also consider any changes in the sales balance or inventory from that date. You can determine your accounts receivable and accounts payable by considering the total sales for each month of the year, determining the average cost of goods sold, and determining your net worth. Net worth is the difference between your current assets and your liabilities.

Your accounts receivable represents the cash that a customer pays directly to you to sell goods or services. Most companies use a variety of methods to determine the number of sales that result in accounts receivable. Sometimes the method used is to apply a percentage of sales to accounts payable. Other accounts receivable computation methods include treating sales as cash only when customers pay within a month after the date of sale, or before the end of the next month.

---

Your accounts receivable represents your customers' payments for the sales of your goods or services. You may need to obtain an estimate of this number from your supplier. You’ll need to determine how much to pay your suppliers and determine how much you can reasonably expect to collect in payments. Sometimes a percentage of credit is used to increase the amount of your receivable. Net cash flow analysis is necessary to determine if the costs of your company's operations are appropriately balanced with the amount of cash generated through normal business operations.

Your accounts payable represents the money you receive from your customers and is, therefore, a portion of your gross accounts receivable. You will receive payment for the sales of products or services to your customers, in check form. Your receivables are debited from your sales. Many businesses use invoices to record sales and balances due from customers. Your receivables will be reflected in your balance sheet as either accounts payable or accounts receivable.

---

Net cash flow is a positive or negative impact from sales, and accounts payable or accounts receivable to your business. Your profit, or loss, will be affected by the difference between your accounts receivable and accounts payable. This will affect your gross profit, operating profit, or net profit depending on the type of business you operate. All of your sales are linked to one or more accounts in your business.

Examples of management accounts would be accounts payable, accounts receivable, and inventory. Within each category of accounts, there are subaccounts. These are accounts for items that a company does not handle directly. Examples of these subaccounts would be marketing, general ledger, and financial accounting.

A statement of account is the single most significant financial record in a company. It provides a snapshot of the current condition of the company at a specific point in time. It provides management with a means to track the development of the company and any problems that may arise over time. A sales statement, income statement, and statement of earnings, are all examples of this type of accounting.

A statement of operations, also known as an income statement, summarizes what happened during a period of time, income-wise, and includes a detailed description of each event. This part of a financial statement represents how the assets and liabilities flow through a company. It is often referred to as the P&L (standing for profit and loss), or simply a P&L statement. Fund managers often use these reports to assess the health of a company's capital structure.

The balance sheet is the second most important aspect of accounting. Its purpose is to provide an accurate and comprehensive picture of a company's financial condition. All of the financial statements described earlier are reflected in a balance sheet. This part of a company's records provides information on its assets, liabilities, revenues, and expenditures. It summarizes what happened during a period of time rather than the exact details of each activity.

A company's financial statement is the final trier of importance. It is what management presents to investors as a complete picture of the company's operations for a given period of time. All of the activities that were reported in the aforementioned statements are included in the financial statement as well. This part of the accounting trier is used to calculate the value of an investment by analyzing the effect of such activity on a company's profits and losses.

All of these account types are very important parts of accounting. Without them, there would be no way to properly conduct an accurate accounting analysis or make timely financial statements. Therefore, companies should always be well organized so that they can produce accurate accounting reports. If a company fails to organize its affairs properly, it will have a poor reputation among its own employees and likely its investors.

Third-party reports. Independently represented individuals prepare these reports outside of the company. They receive periodic reports about the company's activities. For example, if the company has several store locations, it will hire an accountant to conduct third-party inspections of each location. The third-party report will include information about all of the shop locations in the company, the business that runs them, and the products they sell. All of these are examples of accounts in accounting.

Internal accounting. This is the process of controlling information within a company. A large portion of an accountant's day will contain gathering information from the company's different departments. This information is used to formulate reports and to determine how the company should plan its operations. Internal accounting involves many processes, all of which are necessary to conduct a business's financial workings successfully.

Management accounting. This includes data that an accountant gathers from the company, the government, and sometimes customers. This information is then analyzed to determine which business actions are best conducted to increase the company's profitability. Management accounting is a very important aspect of accounting because it controls the internal accounting, and the company's flow of information. As such, the management accountant is responsible for the overall organization of an accounting service.

Management must use other types of reporting in order to fully and accurately represent a company's financial situation at the end of a reporting period. Examples of these types of reports include management reports, management's internal reports, and third-party reports. A management report summarizes what happened during the period of time that the company conducted business.

All of these different types of accounts are required to be reported and maintained by a company. However, they only represent a small percentage of a company's overall records. Plentii is here to help you; let us talk with you and figure out which of these methods are most appropriate for your needs and the needs of your business!