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Accounting: An Overview

By Yann, published on 19/01/2019 Blog > Professional Development > Accounting > What Is Accounting?

We have all heard of accounting, and we probably all know someone in business accounting, but do you really know what an accountant does day to day and what their line of work entails? Perhaps accounting is the perfect job for you… let’s take a look!

A Definition Of Accounting

How do you define basic accounting, when it such a broad field of business?

Well, some dictionaries and corporate thesauri have tried their best, and this is what they have come up with.

Find out how to explain the field of accounting and who does what. How would you define ‘accounting’? Photo on Visualhunt.com

Business Dictionary 

Definition

“Practice and body of knowledge concerned primarily with

  • methods for recording transactions,
  • keeping financial records,
  • performing internal audits,
  • reporting and analyzing financial information to the management, and
  • advising on taxation matters.

It is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm’s assets, liabilities and owners’ equity.

Accounting provides information on the

  • resources available to a firm,
  • the means employed to finance those resources, and
  • the results achieved through their use.”

Investing Answers

Definition

“Accounting is the process of systematically recording, measuring, and communicating information about financial transactions.”

Investopedia

Definition

“Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business. Accounting also refers to the process of summarizing, analyzing and reporting these transactions to oversight agencies, regulators and tax collection entities. The financial statements that summarize a large company’s operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period.”

Merriam Webster

Definition

“1 : the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results
also : the principles and procedures of this system

2a : work done in accounting or by accountants
b : an instance of applied accounting or of the settling or presenting of accounts”

Which Offers The Most Accurate Way To Define Accounting?

As you will see, there are a number of keywords that crop up again and again: analyzing, identifying, recording, measuring, classifying, verifying, summarizing, interpreting, communicating… all of which comes down to a core skill known as organization.

Of course, the addition of several financial terms proves that numerical skills are also a must when it comes to entering the profession, but it is very clear that planning and being able to keep things in order is a deal-breaker for anyone considering a career in accounting.

What Is Accounting: An Expanded Definition

An accountants is an absolutely vital asset in the running of all businesses, though they often sit in the background, facilitating the job of numerous other departments or professional individuals.

Their fundamental job is usually to analyse and provide trustworthy information about financial records, in an ethical and unbiased way. This could have them working in various areas of the financial sector including taxation, financial reporting, forensic accounting, corporate finance, auditing, business recovery and insolvency, or accounting systems and processes.

Depending on what area of the many types of business accountancy you choose to specialise in, you will, as a rule of thumb, be governed by the generally accepted principles of accounting.

Typical daily tasks of an accredited accountant could include:

• The management of financial systems and budgets using spreadsheets and accounting programs
• Undertaking financial audits: i.e. an independent check of the company’s financial position and how this is reported
• Liaising with clients to provide financial information and advice

Most accounting jobs will have you liaising with clients either face to face or electronically. As an accountant, you may be required to hold meetings with clients to communicate financial information. Photo credit: Hayato.D on VisualHunt

Types of accountancy

There are two principal types of accountancy: financial and management accountancy. See below what professionals in these two areas do on a day-to-day basis.

Management accountants

Management accountants work internally to provide financial information. For example, they often provide details to management to aid them with their decision making, led by accounting systems and accounting practices.

A management accountant might get involved in performing tasks such as budget analysis, financial planning and forecasting. The emphasis of management accountancy is on forward-planning: i.e. achieving financial goals and planning finances based on budgets.

Financial accountants

Financial accountants provide information for external bodies, such as shareholders, investors and creditors.

Financial accountants focus more on the act of summarising a company’s current financial position, reporting on very important information like the company’s profitability, liquidity, solvency and stability. Unlike management accounting, financial accounting is required by law.

Many graduates entering an accounting career tend to start off in financial accountancy, mainly working in public accounting.

The responsibilities within this area of practice depend on what area of accounting you specialise in, but might include work surrounding:

• Audit, assurance and advisory
• Business recovery and insolvency
• Corporate finance and risk management
• Forensic accounting
• Tax

Who Makes Up The Accounting World?

As we’ve discovered, working in managerial accounting may not require years and years of work, the field is in fact very broad, with many accounting job titles making up the profession.

See a list below of some of the most common accounting job titles, some of which you may have heard of if you are working towards an accounting course or other accounting qualification and some you may not have known existed! All job descriptions are taken from The Balance Careers‘ website.

If you’d like to find more information about each role, check out the Bureau of Labor Statistics’ Occupational Outlook Handbook.

Accountant

An accountant prepares, analyzes, and maintains financial records. Accountants typically work for a company, managing that company’s finances. They might perform a variety of tasks, including managing a company’s payroll, taxes, and various other payments. There are many different types of accountants, from general accountants to tax accountants. Each one has slightly different duties.

Accounting Clerk

An accounting clerk produces and maintains financial records for a company. He or she might enter financial information into computer software, check this data for accuracy, and/or produce reports on this information. Also known as bookkeeping clerks or auditing clerks, they work in almost all industries.

Auditor

An auditor’s duties are very similar to an accountant’s. Like an accountant, an auditor prepares, analyzes, and manages financial records. However, auditors more typically work for an accounting or payroll service, rather than working for one particular company. Generally, an auditor checks the work performed by a company’s accountant. He or she often helps multiple companies deal with their finances.

Chief Financial Officer

A chief financial officer (CFO) is responsible for managing the finances of an organization. He or she is in charge of financial planning, maintaining financial records, and sometimes also analyzing these records. He or she manages the accounting department, and typically reports to the chief executive officer (CEO) of the organization.

There are many different roles you can undertake in the accounting world. The accounting team at a firm might be made up various different employees each doing their own job. Photo on VisualHunt.com

Controller

A controller (sometimes called a comptroller) is responsible for accounting activities for a particular company. He or she might prepare financial statements and budgets, process data, and/or prepare taxes. The controller typically reports to the chief financial officer (CFO).

Financial Analyst

A financial analyst evaluates businesses and projects to see if an entity is a good candidate to invest in. Financial analysts might make recommendations to a particular bank, company, or to various investors about whether to invest in a particular company.

Of course, there are many more positions that simply can’t be mentioned. You can check out a full list of accounting titles by visiting The Balance Careers.

Tips On Getting Into Accounting

Whether or not you’ve always dreamt of becoming an accountant, or you’ve recently discovered it as a possible career for you, breaking into the industry isn’t always easy; even though you don’t need especially advanced qualifications to enter. The fact is if you don’t have much practical experience of accounting procedures or accounting reports, then you may struggle to beat the competition into business.

To find out ways in which you can improve your chances of being accepted for an accounting job role or promoted from your current position, see below.

Focus On Improving Your Existing Skills

It is no good approaching prospective employers with a less than confident attitude. If you think you are suitable for a role, then you need to make your suitability known.

In order to do this, you should take the time to tailor your CV to the job in question, focusing on how your abilities and experience match with the job description, person specification and desired qualities. But what happens if you have no experience to talk about in your CV and refer back to during interview stages?

Well, if you’ve completed a qualification in accountancy or a related field, and attended accounting classes, then you most probably have the accounting skills you need and just need to find a way to apply them or to find suitable examples of how you already do so. Think about times when you’ve had to make use of numbers, negotiation, and communication skills, as even the smallest examples of how you’ve used accounting methods could be enough to impress the employer.

Be Prepared To Work Your Way Up

As with many careers, you simply cannot start up in your dream role. You must always work your way up to achieve your goals. As a newly qualified accountant, you might need to work your way up from an entry-level position. Here’s how to prepare for this.

You should think about each and every decision you make in relation to your career as a stepping stone to success. Whether it’s an internship, a junior admin position, a degree in accounting or similar (where you can learn the right skills you’ll need for the future) – you’ll be able to gain some of the vital knowledge you need to progress so it is all worthwhile.

Learning on the job may be the quickest way to gain the skills you need rather than going through apprenticeship and other study schemes, however, it all depends on what your future employer is looking for in terms of skills and education.

Getting Qualified To Work In Accounting

AAT, also known as the Association of Accounting Technicians, is the UK’s leading qualification and membership body for accountants, which means that it’s often a prerequisite for many accountancy roles, whether accounting auditing, working with tax returns, working as a ledger accountant or as a public accountant.

Once you’ve got your AAT qualification, you can go on to study ACCA – a course designed to help train more experienced accountants and those wanting to become Chartered Accountants – or a number of other professional qualifications and certificates.

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