The image of an accountant used to be a hunched and bespectacled older man sitting in the dark with stacks and stacks of paper. That image could not be more outdated! Now, an accountant is a savvy business professional who contributes substantially to a company’s bottom line. Becoming an accountant is a smart choice, but first you’ll need to know what is accounting, and more about understanding accounting practices.
Accounting Frequently Asked Questions
To put it simply, accounting is about keeping track of the money. Accounting is how businesses monitor income, expenses, and assets over a given period of time. Accounting often is referred to as “the language of business” because of its role in maintaining and processing all relevant financial information that an entity or company requires for its managing and reporting purposes. Accounting is a field of specialization critical to the functioning of all types of organizations.
Accounting is also a body of principles and conventions, as well as an established general process for capturing financial information related to an organization’s resources. Accounting is a service function that provides information of value to all operating units and to other service functions, such as the headquarters offices of a large corporation.
Accountants learn about accounting and engage in a wide variety of activities besides the basic bookkeeping of preparing financial statements and recording business transactions. Accountants also compute costs and efficiency gains from new technologies, participate in strategies for mergers and acquisitions, quality management, develop and use information systems to track financial performance, tax strategy, and health care benefits management. Good accountants are vital to a company’s success.
Types of Accountants
There are four basic types of accountancy: public, management, and government accounting and internal auditing.
Public accountants perform a broad range of accounting, auditing, tax, and consulting activities for their clients, which may be corporations, governments, nonprofit organizations, or individuals. For example, some public accountants when learning about accounting concentrate on tax matters, such as advising companies about the tax advantages and disadvantages of certain business decisions and preparing individual income tax returns. Others offer advice in areas such as compensation or employee health care benefits, the design of accounting and data-processing systems, and the selection of controls to safeguard assets. Still others audit clients’ financial statements and inform investors and authorities that the statements have been correctly prepared and reported. Public accountants, many of whom are Certified Public Accountants (CPAs), generally have their own businesses or work for public accounting firms.
Management accountants—also called cost, managerial, industrial, corporate, or private accountants—record and analyze the financial information of the companies for which they work. Among their other responsibilities are budgeting, performance evaluation, cost management, and asset management. Usually, management accountants are part of executive teams who have an in depth understanding of accounting and are involved in strategic planning or the development of new products. They analyze and interpret the financial information that corporate executives need in order to make sound business decisions. They also prepare financial reports for other groups, including stockholders, creditors, regulatory agencies, and tax authorities.
Government accountants and auditors work in the public sector, maintaining and examining the records of government agencies and auditing private businesses and individuals whose activities are subject to government regulations or taxation. Accountants employed by Federal, State, and local governments guarantee that revenues are received and expenditures are made in accordance with laws and regulations. Those employed by the Federal Government may work as Internal Revenue Service agents or in financial management, financial institution examination, or budget analysis and administration.
Internal auditors verify the accuracy of their organization’s internal records and check for mismanagement, waste, or fraud. Internal auditing is an increasingly important area of accounting and auditing. Internal auditors examine and evaluate their firms’ financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate to protect against fraud and waste. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and procedures, laws, and government regulations. Internal auditors also may recommend controls for their organization’s computer system, to ensure the reliability of the system and the integrity of the data.
Some public accountants specialize in forensic accounting—investigating and interpreting white-collar crimes such as securities fraud and embezzlement, bankruptcies and contract disputes, and other complex and possibly criminal financial transactions, including money laundering by organized criminals. Forensic accountants combine their knowledge of accounting and finance with law and investigative techniques in order to determine whether an activity is illegal. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.
What Degrees Are Available in Accounting?
The degrees available in the field of accounting are:
Associate Degree In Accounting. This degree usually prepares students to transition to a bachelor’s degree accounting program, and offers many basic mathematical and accounting courses for understanding accounting practices.
Bachelor Degree In Accounting. This is the primary degree required to work as an accountant, and usually includes becoming a Certified Public Accountant. Becoming a CPA typically includes 150 credit hours of coursework, and specific courses, usually in financial accounting, managerial accounting, taxation, and auditing.
Certificate In Accounting. This certificate is usually attained by a person who has a non-accounting bachelor’s degree and wants to attain a graduate degree in accounting.
Master Degree In Accounting. This is often an MBA program, and is a great way to meet the state licensing continuing professional education requirements for learning accounting, as well as assisting your career. This is a qualification that will prove invaluable to those entering or already in this position, as the skills and knowledge acquired through this course will enable you to look forward to a successful and lucrative career in business accounting administration.
Doctoral Degree In Accounting. This degree is primarily a research and education degree, and is designed to prepare individuals for a career in accounting research and teaching at the university level.
We hope this article has helped provide you with a better understanding of what is accounting, and helped you learn more about accounting. Understanding accounting is the first step toward earning an accounting degree and establishing your accounting career!