Accounting is the systematic process of measuring the economic activity of a business to provide useful information to those who make economic decisions. There are three major types of accounting; Financial Accounting, Managerial Accounting, and Tax Accounting.

Other Types of Accounting

A few additional types of accounting exist. Accounting information systems are the processes and procedures required to generate accounting information. These include:

1. identifying the information desired by the ultimate user,
2. developing the documents (such as sales invoices) to record the necessary data,
3. assigning responsibilities to specific positions in the firm, and
4. applying computer technology to summarize the recorded data.

Another type of accounting deals with non-business organizations. These organizations do not attempt to earn a profit and have no owners. They exist to fulfill the needs of certain groups of individuals. Non-business organizations include

1. hospitals,
2. colleges and universities,
3. churches,
4. the federal, state, and local governments,
5. many other organizations such as museums, volunteer fire departments, and disaster relief agencies.

With nonbusiness organizations we have a need for all the types of accounting we have just reviewed. For example, a volunteer fire department might need to borrow money to purchase a new fire truck. Its banker would then require financial accounting information to make the lending decision.

Nonbusiness organizations are fundamentally different from profit-oriented firms:
They have no stock holders or owners and they do not attempt to earn a profit. Because of this, the analysis of the financial performance of business and nonbusiness organizations is considerably different. Most colleges and universities offer an entire course devoted to the accounting requirements of non-business organizations.