What is 'Micro Accounting'

Micro accounting is accounting at a personal, corporate or government level, and is the opposite of macro accounting, which is the compilation of national accounts, or macroeconomic data, of a country.

BREAKING DOWN 'Micro Accounting'

Micro accounting is generally used to refer to accounting for small businesses or company subunits and divisions. By definition, all conventional accountants are micro accountants. Micro accounting for small business clients is a large market and focuses on the preparation of financial statements for internal use and income tax preparation.

Micro Accounting versus Macro Accounting

Micro accounting applies to company-level and individual accounting, while macro accounting is the statistics and performance of entire countries and nations. Micro accounting can apply to government agencies as well, with the big distinction for macro accounting being that it covers entire nations.  

Macro accounting doesn't necessarily involve any accounting. Where accountants are the ones doing micro accounting, it’s usually economists doing macro accounting. Accountants deal with recording transactions and analyzing data, while economists study and analyze the allocation of resources.

Micro Accounting and Economics

The meaning of macro is big picture, while micro focuses on something smaller, more individualistic. This holds true in accounting, as it does in economics. Microeconomics covers company-level or individual economic changes, which includes company-specific pricing, and supply and demand. Macroeconomics is the bigger picture, being the study of national data, such as unemployment rates, and imports and exports.  

The microeconomic and macroeconomic relationship is similar to the micro, macro one in accounting. Companies use micro accounting data to make decisions that impact micro accounting.

Micro Accounting Basics

Micro accounting is what most people know as accounting. It’s the recording of transactions, preparation of financial statements, tax filings, among other things. Micro accounting is generally used when describing an accounting subset.

Analyzing the financials and transactions of the subsidiaries of a larger company may be referred to as micro accounting. Micro accounting can involve breaking down a larger company’s financials into divisions or subsidiaries.

It can also mean looking at something on a smaller scale, whether it be a specific company department or specific time frame. For example, to figure out why a company lost money in a particular quarter one might do some micro accounting to identify the source.

When you have a larger subset but are drilling into a specific unit or entity, one may use the term micro accounting. Still, broadly, anything accounting related for individuals, companies or government agencies is considered micro accounting.  

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