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

By DeVry University

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.

How long have accountants been doing their thing? The history of modern accounting dates back to the 15th century when Luca Pacioli, an Italian mathematician, revamped the common bookkeeping structure of the time with his 1494 textbook called Summa de Arithmetica, Geometria, Proportiono et Proportionalita, which demonstrated the benefits of a double-entry system of bookkeeping.

Prior to this, most transactions were done using a barter system. Bookkeepers documented transactions in a narrative style that described what they owed and who owed them. This single entry system, with every transaction recorded in the same column, was the standard for the time. As currencies became available and tradesmen and merchants began to build wealth, they needed a more sophisticated way to keep the books. Pacioli’s double-entry system, with its separate columns for debits and credits, was the solution and remains the basis for the way we keep the books today.

The appearance of corporations and the emergence of the railroads in the United States in the 1800s were the catalysts to transform the ancient practice of bookkeeping into accounting as we know it. With the railroads enabling goods and people to be transported with unprecedented swiftness to different destinations, distribution networks, shipping schedules and an emphasis on efficiency suddenly became the new reality.

Businesses and investors were empowered to make informed decisions with financial statements, cost estimates, production reports and other metrics in a new and faster-paced world where time and distances were shortened and standardized, introducing a new way of doing business. For the first time, income and cash flow statements allowed investors to have a clearer picture of the financial health of a business.

A short time later, the accounting profession was born with the establishment of the American Association of Public Accountants in 1887 and, in 1896, of the title Certified Public Accountant (CPA).

Types of Accounting

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

  • 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 teams. The management accountant’s purpose is to help the a company make the best financial decisions.

  • 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.  

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. Its purpose is to provide 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. 

It’s also necessary for making and collecting payments. Without standardized accounting practices, it would be difficult for a company’s managers to keep track of what they owe to vendors (accounts payable) and what customers owe them, and on what terms (accounts receivable).

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?

Accounting professionals perform a broad variety of services that are essential to the financial affairs of businesses and individuals alike. The regular duties of accountants and auditors typically 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 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

Many accountants and auditors choose to specialize, working for organizations that provide assurance services or risk management, or within a specific field such as finance, insurance or healthcare where they may need a specific skillset or additional training.

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.1 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.

Finally, in a growing economy, the need for accountants and auditors is expected to grow as they are integral to preparing and examining growing businesses’ financial records, and will be needed to help handle the increase in financial documentation these businesses will require as they go public. 

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, 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 the 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 documents 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.


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.


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 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 they perform a wide variety of tasks across 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 and pass the 4-section CPA Exam, then apply for licensure in their state or jurisdiction.

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 choose, accountants must be adaptable and technology-savvy they move forward in their career. 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 next steps with undergraduate and graduate-level accounting programs  that may help you prepare to pursue a variety of career roles in this growing and evolving field. 

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