What are the different types of accounting practices in the UAE?
Accounting is a core function of every firm irrespective of its size, nature, and type. Accounting is an inevitable part of business organizations and it is similar to looking yourself into the mirror every day in order to make sure that you are ready and looking perfect for an event. In similar manner accounting also helps a business to ensure whether it is ready for any kind of future events such as expansion and if it is ready to face any unanticipated event. Accounting enables you to know your business’s current position and the profit and loss gained by the business.
Even though accounting plays a vital role for the business, many individuals are unaware of it and they don’t provide adequate focus to such a function which in the future opens the way for high-level risks and penalties including losses. Many times, the entrepreneurs or the management of a business doesn’t know or is confused regarding different types of accounting practices in the UAE. Being a leading financial company providing accounting services in UAE, we share some important information regarding different types of accounting practices in the UAE.
Financial accounting is a type of accounting process which involves tracking all the financial transactions of a business. It is considered a traditional practice in which all the accountants are expected to perform the accounting. A financial accountant by following globally or locally accepted accounting standards provides a financial report which contains a summary of all the financial transactions of a business.
By tracking the financial position based on cash inflow and outflow as well as the position of assets and liabilities the financial accountants try to provide reports regarding the circulation of funds in the organization. The financial statements prepared may include profit and loss account, balance sheet, cash flow statement, statement of change in equity, etc. which may be used by parties like shareholders and investors. Every business firm may maintain its own accounting procedures and software.
Also read: Various Ways To Improve Your Accounting Strategy During An Economic Downturn
Cost accounting deals with the analysis of all the costs incurred in producing finished goods by a firm. It mainly involves fixed costs, variable costs or input costs, etc. Analysis of this cost will help a firm to make decisions regarding spending, inventory, supply, pricing, etc. This accounting process involves finding variations between the evaluated costs and the actual costs incurred in order to analyze the difference. This information can be used by the firms to take corrective actions if there are any severe variations.
Forensic accounting acts as a financial detective as it is conducted to detect any fraud or malpractices performed in the business and to find evidence of such activities. The main aim of conducting such accounting is to provide evidence in the court of the law regarding any embezzlement and an accounting report is handed over to the court by the accountants who detect whether the firm is prone to such activity or not.
Management accounting is quite similar to financial accounting as it involves the analysis of the financial transactions of the firm but this report is intended to use it internally. The report is provided to the business managers, which is used by them to make prospective business decisions. Management accounting involves the use of various statistical tools and techniques to present the data. Management accounting mainly focuses on the interpretation of trends, making assumptions, and all the qualitative elements of the business.
It is concerned with the process of determining the tax liabilities of a firm. In the case of the UAE, the only tax which is applicable is VAT, and under this accounting practice, the accountants ensure whether the firm complies with all the tax laws and they help the firm to pay the respected tax on time without delay. They protect the firms from penalties and fines due to delay or non-payment of tax.
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CDA can help
Outsourcing the accounting needs to the accounting firms in Dubai is the best course in order to reduce cost and to avail professionalized services. Getting an idea of different types of accounting practices in the UAE will help the entrepreneurs to select the most appropriate accounting practice which they are in need of. CDA with its professionalized team and years of experience of exceptional service is always ready to provide all kinds of accounting services to the customers. Providing custom-tailored services to the clients has made CDA none of the well-known accounting auditing firms in Dubai. For any kind of accounting or audit-related queries please do contact CDA.
“I cannot give you the formula for success, but I can give you the formula for failure. It is: Try to please everybody.”