Types of Accounting

If you’re good with numbers and looking for a solid career, it makes sense that you’d consider accounting.

“Whether working in corporate settings, innovative startups or as strategic consultants, accountants are essential architects of business sustainability and growth, making it a vibrant and impactful career choice,” said Mona Stephens, an accounting faculty lead at Southern New Hampshire University (SNHU) and a Certified Public Accountant (CPA) with 25 years of experience in the field.

In addition to math proficiency, there are a number of soft skills you’ll need to become an accountant, the U.S. Bureau of Labor Statistics (BLS) reports. These include:

• Analytical and critical-thinking skills
• Attention to detail
• Communication skills
• Organizational skills

If you have all these traits and are interested in business, a role as an accountant might well be a good fit. But before you get started with a degree, you’ll need to determine which area of the field interests you most.

So, What Are the 5 Main Types of Accounting?

There are five major types of accounting, according to Stephens: They include:

• Cost accounting
• Financial accounting
• Forensic accounting
• Management accounting
• Tax accounting

Each of these branches has its own purpose and function, and you might benefit from a specialized education depending on the type of accounting you plan to practice.

Cost Accounting

Cost accounting is a branch of accounting focused on recording, analyzing and reporting the costs associated with the production of goods or services within an organization, according to Stephens.

“Its primary goal is to provide management with accurate cost information that can be used for decision-making, cost control, and performance evaluation,” she said.

Stephens noted that cost accounting allows businesses to:

• Assess profitability
• Make strategic decisions
• Optimize resource allocation
• Set prices

"It is particularly crucial in manufacturing and production industries where understanding and managing costs directly impact financial performance," she said.

Financial Accounting

Financial accounting is concerned with the preparation of financial statements for external stakeholders, according to Stephens, including investors, creditors, regulators and the public.

“Its primary objective is to provide accurate and reliable information about the financial performance and position of an organization over a specific period,” she said.

She noted that financial accounting plays a crucial role in the economy, providing essential information to investors, creditors, analysts and other stakeholders.

Forensic Accounting

Forensic accounting is like the detective work of the accounting world, according to Stephens.

“It involves digging deep into financial records, transactions and reports to uncover fraud, embezzlement or other financial misconduct,” she said. “Think of it as financial investigation combined with accounting expertise.”

At SNHU, you can specialize by earning an accounting degree with a concentration in forensic accounting. Stephens said pursuing this concentration provides skills in fraud detection, financial investigation and auditing.

“You'll gain expertise in analyzing financial records, conducting investigations and providing litigation support, preparing you to identify and prevent financial misconduct and support legal proceedings,” she said.

Management Accounting

Management accounting is focused on providing financial and non-financial information to organization’s internal stakeholders for the purpose of decision-making, planning and overall management of the organization, said Stephens.

“Unlike financial accounting, which primarily focuses on reporting historical financial data to external stakeholders — such as investors, regulators and creditors — management accounting is oriented towards internal users within the organization,” she said.

SNHU’s bachelor’s in accounting and finance offers a concentration in management accounting to prepare you to specialize in this area. According to Stephens, pursuing a management accounting concentration equips you with skills in:

• Budgeting
• Cost management
• Financial analysis
• Strategic planning

"You'll gain expertise in using accounting data for decision-making, performance evaluation, and optimizing business operations, preparing you for roles in financial management and organizational leadership," Stephens said.

You could also opt for a graduate certificate in management accounting after you earn your bachelor’s degree.

Tax Accounting

Tax accounting focuses on the preparation, analysis and planning of tax-related matters for individuals, businesses or other entities, said Stephens.

“It involves interpreting and applying tax laws and regulations to ensure compliance while minimizing tax liabilities within the bounds of the law,” she said.

After earning a bachelor’s in the field, a graduate certificate in tax compliance and planning, like SNHU’s, could help you further specialize as a tax expert.

Why Study Accounting?

To become an accountant, you’ll need to earn a bachelor’s degree in a related field, according to BLS, and some employers may prefer to hire workers with a master’s degree,

SNHU offers a master’s in accounting that’s aligned with the CPA exam. Earning a Master of Business Administration (MBA) in Accounting is another option you might pursue after earning your bachelor’s if you’re looking to improve your employability.

So, is an accounting degree worth it? BLS reports that accountants and auditors earn a higher than average salary, with a median annual wage of $79,880 in 2023 and the highest 10% of earners in the field making $137,280.*

And the work itself can be satisfying, too. “If you enjoy working with numbers and solving problems, accounting can be a really fulfilling career,” Stephens said.

*Cited job growth projections may not reflect local and/or short-term economic or job conditions and do not guarantee actual job growth. Actual salaries and/or earning potential may be the result of a combination of factors including, but not limited to: years of experience, industry of employment, geographic location, and worker skill.

Mars Girolimon '21 '23G is a staff writer at Southern New Hampshire University where they earned their bachelor's and master's, both in English and creative writing. In addition to their work in higher education, Girolimon's short fiction is published in the North American Review, So It Goes by The Kurt Vonnegut Museum & Library, X-R-A-Y and more. They're currently writing their debut novel, which was Longlisted for The First Pages Prize. Connect with them on LinkedIn.