Difference Between Public Account Vs Private Accounting

Difference Between Public Account Vs Private Accounting

Private Accounting

Instead of working in public accounting, you might choose to be an employee of a business enterprise. In private (or managerial) accounting, you would be involved in one of the following activities.

  1. General accounting - recording daily transactions and preparing financial statements and related information.

  2. Cost accounting - determining the cost of producing specific products.

  3. Budgeting- assisting management in quantifying goals concerning revenues, costs of goods sold, and operating expenses.

  4. Accounting information systems—designing both manual and computerized data processing systems.

  5. Tax accounting - preparing tax returns and engaging in tax planning for the company.

  6. Internal auditing - reviewing the company’s operations to determine compliance with management policies and evaluating the efficiency of operations.

You can see that within a specific company, private accountants perform wide a variety of duties as public accounts.

Public Accounting

In public accounting, you would offer expert service to the general public in much the same way that a doctor serves patients and a lawyer serves clients. A major portion of public accounting practice involves auditing. In this area, a certified public accountant (CPA) examines the financial statements of companies and expresses an opinion as to the fairness of presentation. When the presentation is fair, users consider the statements to be reliable.

For example, Hilton investors and creditors would demand audited financial statements before extending it financing. Taxation is another major area of public accounting. The work performed by tax specialists includes tax advice and planning, preparing tax returns, and representing clients before governmental agencies such as the Internal Revenue Service. A third area in public accounting is management consulting. It ranges from installing basic accounting systems to helping companies determine whether they should use the space shuttle for high-tech research and development projects.\