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.  

RELATED TERMS
  1. Account Activity

    Account activity generically applies to whenever a movement of ...
  2. Chart of Accounts

    A chart of accounts is a list of each account a company owns, ...
  3. Account Aggregation

    Account aggregation is a process by which accounts are linked ...
  4. Account Balance

    An account balance is the amount of money in a financial repository, ...
  5. Linked Savings Account

    A linked savings account is a savings account that is connected ...
  6. The Accounting Review

    The Accounting Review is an academic journal published by the American ...
Related Articles
  1. Trading

    Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  2. Personal Finance

    Handling High-Yield Savings Accounts

    Is a high-yield savings account right for you? Read on to find out what they have to offer.
  3. Investing

    A Day In The Life Of An Accountant

    An analysis of the accountant profession, who becomes an accountant, what they do, where they work, and salary ranges.
  4. Investing

    Macro Funds Struggle, Even With Trump Rally

    Despite expectations of success in the new year, macro funds have struggled to deliver.
  5. Insights

    A Look At Accounting Careers

    More than just crunching numbers, this career blends detective work with trouble shooting.
  6. Small Business

    Best Checking Accounts For Small Businesses

    What you need to know to choose the best checking account for your small business – and where to look.
  7. Personal Finance

    The Complete Guide to Checking Accounts

    Here is the A to Z of checking accounts: types of accounts, basics on check writing, debit cards, overdraft protection and much more.
  8. Personal Finance

    What Management Accountants Do

    If you like keeping track of a company's income and expenses but also want to hold a position with significant responsibility and authority, management accounting could be the job for you.
RELATED FAQS
  1. What is cost accounting?

    Learn about the main benefits of cost accounting systems, how they are different from financial accounting and why they are ... Read Answer >>
  2. What's the difference between the current account and the capital account?

    Both accounts relate to the balance of payments of a nation. One considers goods and services currently produced, the other ... Read Answer >>
  3. What are the differences between a change in accounting principle and a change in ...

    Learn how to differentiate between a change in accounting principle and a change in accounting estimate and how accountants ... Read Answer >>
  4. Is there such a thing as a nano cap or micro cap index?

    While there are indexes that track micro cap stocks, there are few indexes tracking nano caps. Although definitions vary, ... Read Answer >>
Trading Center