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What is Accounting? Everything You Need to Know About This Growing Field

By DeVry University

The information presented here is true and accurate as of the date of publication. DeVry’s programmatic offerings and their accreditations are subject to change. Please refer to the current academic catalog for details.

 

September 9, 2020
7 min read

If you’ve wondered whether a career in accounting would be right for you, you’re going to want to learn all you can about this occupation and gain an understanding of its prominence in today’s business world. But what is accounting, and what does it encompass exactly? Because the field is so wide-reaching, it’s sometimes difficult to describe.

In this article, we’ll explore some of the different types of accounting, why it’s so important, how recent technology is impacting the field, the projected employment outlook, some potential career paths and look at some of what accountants do on a daily basis. 

What is Accounting?

Simply defined, accounting is the process of recording a business’ financial transactions. This involves summarizing, analyzing and reporting transactions, in monetary terms to oversight agencies, tax collection entities and regulators. In accounting, financial statements are used as a concise summary of a company’s transactions over a given period of time, encapsulating its operations, financial position and cash flows.

Types of Accounting

Within the scope of this profession are the many types of accounting, spanning business and personal finances. 

Financial accounting

This type of accounting records, analyzes and summarizes a business’s financial transactions. The responsibility of financial accountants is mainly to create statements that provide information about the business’s financial condition for investors, customers and creditors. Financial accountants use a standardized set of rules called the Generally Accepted Accounting Principles (GAAP), making their reporting consistent across accounting periods and enabling transparency.

Tax accounting

Tax accountants are the professionals who decipher the complex tax code. They help individuals and organizations comply with tax regulations, understand their liabilities and make payments. This work involves reviewing financial statements, calculating taxes and preparing tax returns.

Management accounting

Also called managerial accounting, this practice is similar to financial accounting in its scope and methods, but it focuses on creating reports that are submitted to business managers and others who are part of internal management and corporate finance teams. The management accountant’s purpose is to help their company make the best financial decisions. Many of these accounting and finance professionals pursue the Certified Management Accountant (CMA®) certification.

Forensic accounting

This type of investigative accounting focuses on auditing both businesses and individuals to uncover signs of fraud or embezzlement. Forensic accountants often work for insurance companies or law enforcement agencies, analyzing financial records, tracing funds, recovering assets and sometimes testifying in court.

Auditing

Auditors analyze a company’s financial activity to ensure compliance with regulations and best practices and examine the company’s records to create reports. There are two types of auditors: internal and external. Internal auditors work within an organization to provide business audits that help the organization improve operations and ensure regulatory compliance. External auditors are accountants who work for a third party, such as a regulatory agency, reviewing company accounts to be sure they are accurate and compliant with regulations. 

Cost accounting

Cost accounting is a subset of management accounting used to help a company measure financial performance and make informed business decisions. This type of accounting takes a holistic view of a company’s production expenses, fixed and variable costs or overheard needs to identify how much profit they’ve made.

Why is Accounting Important?

The importance of accounting is impossible to overstate. Whether managed by a single accountant at a small business or a staff of dozens at a large corporation, accounting is an elemental function of just about any business, providing an accurate picture of a company’s finances based on its financial transactions so that management can make informed decisions and turn a profit.

Accounting is also important when it comes to funding. Private investors need an accurate indication of the company’s performance, which is provided to them in the form of financial statements. If the company wants to borrow money for operating expenses or growth, financial statements in compliance with accounting principles will allow banks to carefully review the company’s financial state prior to approving the loan.

Accounting records are also used to establish a company’s value, so a business owner looking to sell to a larger business can establish a realistic valuation to negotiate the sale. On a big-business scale, such valuations are used in mergers and acquisitions. 

The discipline also plays a part in compliance with regulations, from paying taxes to state and federal authorities to the periodic financial reports public companies are required to file with the U.S. Securities and Exchange Commission.

What Do Accountants Do?

If you’re wondering what accountants do, this really depends on the type of accounting they work in, which we covered in the section above. If accountants and auditors choose to work for organizations that provide assurance services or risk management, want to specialize or are drawn to a specific field such as finance, insurance or healthcare, they may need to develop a specific skillset or gain additional training.

However, some of the more general duties that accountants and auditors are typically responsible for include:

  • Organizing, analyzing and maintaining financial records.

  • Examining financial statements to ensure they are accurate and compliant with laws and applicable regulations.

  • Inspecting account books and systems for efficiency and use of accepted accounting procedures, and to identify potential risks for fraud.

  • Calculating the amount of taxes owed by an organization or individual, preparing tax returns and making sure taxes are paid to authorities such as the Internal Revenue Service on time to avoid penalties.

  • Suggesting ways to reduce costs, enhance revenues and improve profits.

  • Assessing financial operations, identifying risks and challenges, and making recommendations for best practices to management.

Accounting Employment Outlook

Attributing employment growth to the ongoing globalization of business, a growing economy and a complex tax and regulatory environment, the Bureau of Labor Statistics (BLS) projects employment of accountants and auditors to grow steadily at 4% from 2022 to 2032, with about 126,500 job openings projected each year, on average, over the decade.This growth is projected on a national level and local growth will vary by location. This projection is not specific to DeVry University graduates and may include earners at all stages of their careers.

The BLS further notes that technological change is expected to affect the role of accountants over the next decade, with some routine tasks being automated through the use of artificial intelligence (AI) and platforms like cloud computing and blockchain. This automation, according to the BLS, is not expected to reduce overall employment demand, but should make the advisory and analytical aspect of accountants’ work more prominent.

What Are Some Popular Careers in Accounting?

Accountants work in a variety of industries and are employed by companies of all sizes. Though public accounting is a popular career choice, there are also unique accounting roles in federal, state and local government, and at Fortune 500 companies, small businesses and non-profit organizations. 

Financial accounting

Financial accountants organize and keep track of financial statements and maintain accounts payable and receivable. Financial accountants work extensively with technology to compute and classify financial records, ensuring that they're properly prepared for audits or questions from organizational leaders.

Financial services industry planning and analysis

People in this field provide senior management with forecasts of the company's profits and losses (income statements) and operating performance for the upcoming quarter and year. They analyze risk and help their companies adjust according to the financial data they're given.

Federal and state taxation

Tax laws are complicated on all levels, and accountants who work in compliance or tax management may find employment working with federal or state taxes in either organizational or consumer-facing roles.

Internal auditing

Internal auditors are the impartial watchdogs responsible for upholding the missions and visions of their organizations while simultaneously ensuring that funds are flowing where they need to be. Internal auditors might focus on:

  • Legal or regulatory compliance

  • Creating and maintaining proper financial procedures

  • Reviewing all financial information that may be requested during an external audit by the U.S. Securities and Exchange Commission (SEC)

  • Risk management and asset protection

  • Accuracy and compliance with internal control procedures

Budget and credit analysis

This position requires you to create timely and accurate monthly financial analysis and reporting, as well as financial presentations that company leaders can use when meeting with investors or board members.

Purchasing

No purchasing department can operate well if it's not on budget. That's where accountants come into play. Purchasing departments require professionals who are skilled at planning and assessing budgets.

Claims

Managing claims is essential to maintaining balance, according to the accounting equation. A business is made up of assets, and the claims on those assets impact the status quo. Claims professionals are responsible for keeping their organizations’ financial health in check.

Financial consulting

Because accountants have been trained in problem-solving, analytics and research, they may choose to work as consultants. Financial consultants determine their clients’ financial positions and help them reach financial goals – whether those clients are individuals or organizations – by assessing debts, income, assets and expenses.

What are Accounting Standards?

Accounting standards were established by the Financial Accounting Standards Board (FASB) to ensure financial reporting is done fairly and accurately. Prior to the establishment of these rules, companies could vary their accounting methods, potentially exposing investors to financial risk. The 10 principles of the GAAP, such as regularity, consistency, sincerity, prudence, continuity and others defend against this and establish a framework for consistent reporting.

The GAAP also has 4 constraints built into it that accountants and auditors must adhere to when preparing financial statements, ensuring accuracy, consistency and keeping them aligned with financial reporting regulations. 

What is the Accounting Cycle?

Investors and lenders depend on information that presents a true picture of a business’s financial wellbeing. The accounting cycle is a repeatable process that records all financial transactions in a specific accounting period and requires closing entries be posted at the end of it. This process ensures that financial performance is tracked, allowing one period to be compared to another over time.

What is a CPA?

A CPA, or Certified Public Accountant, is an accountant who has passed the Uniform CPA Exam and obtained CPA licensure in their state or jurisdiction. Many people associate CPAs with tax preparation, but the scope of their services extends beyond tax season. They perform a wide variety of accounting services and tasks spanning different types of accounting, including auditing and forensics.

As described in BLS occupational outlook data, accountants typically choose to obtain CPA certification and licensure to enhance their job prospects or gain clients, and any accountant who files a report with the SEC is required to be a licensed CPA.

To become a CPA, candidates must obtain at least 150 semester hours of college coursework, though that number may vary by state, and pass the 4-section CPA Exam,2 then apply for licensure.

CPAs have to renew their licenses periodically. To make sure they are kept up to date with the industry’s best practices and regulations, license renewal requirements vary depending on where you live, but most commonly stipulate maintaining a certain number of hours of continuing professional education (CPE) courses, as well as ethics courses.

Accounting Technologies

Regardless of any specialty they may choose, accountants must be adaptable and technology-savvy as they move forward in their careers. This industry isn’t just growing, it’s also going digital. Some tasks may become more automated – making the analytical and strategic roles of accountants more prominent, according to the BLS. This means that the role of the accountant, for example, may change from entering accounting data and preparing financial reports to learning to leverage this data to enable better business decision-making.

As technology continues to impact the business world, the accountant’s role is continuously evolving to meet the changing needs of the companies they serve. As an accounting professional, you would expect to work with accounting information systems and technology as your role may include installing, designing, operating and managing integrated automated accounting systems. Some technology-related tasks that accountants may undertake include:

  • Automating ledgers in accounting software to reduce the repetitive processes that can waste time and lead to human error.

  • Processing transaction cycles to ensure revenue, expenditures, conversion, financing and fixed assets are all accounted for.

  • Implementing application controls to ensure that all finances and transactions have a place on the balance sheet. This is particularly helpful if there is an audit and organizational spending behavior must be accounted for.

  • Configuring information security requirements. As an accountant, you might be the only person—or one of only a few—with access to certain databases and software programs. In this case, it would be up to you to take steps to ensure that only authorized personnel can access information on the programs your company uses. You might also be responsible for defining the terms by which people have access to certain fields, screens or information.

  • Integrating business information systems. Because you're responsible for the financial health of your organization, it may be up to you to set up business information systems in ways that ensure the safety and privacy of your company's confidential information.

Begin Your Accounting Career Journey with DeVry

If you’re thinking a career in accounting is right for you, we can help you take the first steps with undergraduate and graduate-level accounting degree and certificate programs that can help you prepare to pursue a variety of career roles in this growing field. 

Online learning with DeVry can help you balance your commitment to education with your busy life, and scholarships and grants can make your education with us more affordable.3

DeVry’s Accounting programs have received specialized accreditation from the Accreditation Council for Business Schools and Programs (ACBSP, www.acbsp.org).4

At DeVry and our Keller Graduate School of Management, we can help you learn what you need to know to thrive in accounting. Several of our programs integrate elements of Becker Professional Education’s CPA Exam Review, with select programs helping you prepare to pursue the CPA2 or CMA exams.

1 Growth projected on a national level. Local growth will vary by location. BLS projections are not specific to DeVry University students or graduates and may include earners at all stages of their careers, not just entry level. https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm

2 Credits and degrees earned from DeVry, including Keller, do not automatically qualify the holder to sit for professional licensing exams to practice certain professions. For example, the educational requirements for Certified Public Accountant (CPA) licensure and/or certification vary by state (and U.S. territory). The differences in the number of accounting course hours and the specific accounting course topics required may impact a student's ability to sit for the Uniform CPA exam and apply for licensure in different jurisdictions. Students interested in practicing a regulated profession must contact the appropriate state regulatory agency for licensing requirements in their field of interest and Students are responsible for contacting the state board of accountancy for the jurisdiction in which they are applying to confirm whether they have completed the appropriate credit hours and coursework to qualify to take the CPA exam. DeVry University and its Keller Graduate School of Management are not able to ad https://www.devry.edu/compliance/student-consumer-info.html#cpa for additional information.  

3 Students may participate in only one DeVry University-based scholarship, grant or group tuition benefit program at a time. Those who qualify for more than one program will be presumed to accept the program with the highest reduction in by- session cost. Students who qualify for and prefer a different tuition benefit program must confirm, in writing, the alternate program in which they wish to participate prior to starting classes at DeVry. Scholarship and grant terms and eligibility conditions are subject to change. Scholarships are available to those who apply and qualify. Click here for more information.

4 Student Achievement At-a-Glance - Available for all of DeVry and Keller's ACBSP accredited programs. For a full list of DeVry University's business and accounting degree programs accredited by ACBSP, please see the Accreditation page.

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