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Why Accounting?

So why would anyone choose a career in accounting as opposed to another business profession, like investment banking or management consulting? Isn’t accounting boring and tedious?

As we discussed earlier, accounting has always had an image problem, stuck in the public consciousness as a profession populated by math geeks who love crunching numbers but little else. While this stereotype may have been accurate at one point in history, it no longer presents an accurate picture of what the career is like. While the basic mechanics of accounting can certainly become tedious, such functions are increasingly becoming automated, with accountants focusing more on analysis, interpretation and business strategy.

In fact, accounting has been rated one of the most desirable professions available. According to The 2002 Jobs Rated Almanac, “accountant” was the fifth best job in terms of low stress, high compensation, lots of autonomy and tremendous hiring demand. Furthermore, the National Association of Colleges and Employers’ Winter 2002 Salary Survey ranked the accounting services industry first among the top five employers with job offers for graduating college students.

Accountancy or accounting is the measurement, statement, or provision of assurance about financial information primarily used by lenders, managers,investors, tax authorities and other decision makers to make resource allocation decisions between and within companies, organization, and public agencies. The terms derive from the use of financial accounts.

Accounting is a service activity. Its function is to provide quantitative information primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions, and in making reasoned choices among alternative courses of action.

It is also the discipline of measuring, recording, communicating and interpreting financial activity. Accounting is also widely referred to as the “language of business”.

Practitioners of accountancy are known as accountants. There are many professional bodies for accountants throughout the world. Many allow their members to use titles indicating their membership or qualification level. Examples are Chartered Certified Accountant (ACCA or FCCA), Chartered Accountant (FCA, CA or ACA), International Accountant (FAIA or AAIA), Management Accountant (ACMA, FCMA or AICWA), Certified Public Accountant (CPA) and Certified General Accountant (CGA or FCGA).

A bookkeeper (or book-keeper), sometimes called an accounting clerk in the United States, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing up the “daybooks.” The daybooks consist of purchase, sales, receipts and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct daybook, suppliers ledger, customer ledger and general ledger. The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.

Bookkeeping (also book-keeping or book keeping) is the recording of all financial transactions undertaken by an individual or organization. The organization may be a business, a charitable organization or even a local sports club. Bookkeeping is “keeping records of what is bought, sold, owed, and owned; what money comes in, what goes out, and what is left.” A financial transaction is any event that involves money.

Individual and family bookkeeping involves keeping track of income and expenses in a cash account record, checking account register, or savings account passbook. Individuals who borrow or lend money track how much they owe to others or are owed from others.

Bookkeeping may be performed using paper and a pen or pencil. With increasing complexity in tax regulations and to minimize calculation errors, many organizations use accounting software.

Auditing is a related but separate discipline, with two sub-disciplines: internal auditing and external auditing. External auditing is the process whereby an independent auditor examines an organisation’s financial statements and accounting records in order to express an opinion as to the truth and fairness of the statements and the accountant’s adherence to Generally Accepted Accounting Principles (GAAP), or International Financial Reporting Standards (IFRS), in all material respects. Internal auditing aims at providing information for management usage, and is typically carried out by auditors employed by the company, and sometimes by external service providers.

Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarised, interpreted, and communicated; for public companies, this information is generally publicly-accessible. By contrast management accounting information is used within an organisation and is usually confidential and accessible only to a small group, mostly decision-makers. Tax Accounting is the accounting needed to comply with jurisdictional tax regulations.

Payroll master, also called payroll technicians, screen timecards for calculating, coding, or other errors. They compute pay by subtracting allotments, including Federal and State taxes and contributions to retirement, insurance, and savings plans, from gross earnings. Increasingly, computers perform these calculations and alert payroll clerks to problems or errors in the data. In small organizations or for new employees whose records are not yet entered into a computer system, clerks may perform the necessary calculations manually. In some small offices, clerks or other employees in the accounting department process payrolls.

Payroll master record changes in employees’ addresses; close out files when workers retire, resign, or transfer; and advise employees on income tax withholding and other mandatory deductions. These workers also issue and record adjustments to workers’ pay because of previous errors or retroactive increases. Periodically, they prepare and mail earnings and tax-withholding statements for employees’ use in preparing income tax returns. Payroll clerks need to be aware of changes in tax and deduction laws, so that they can implement them.

An accountant is a practitioner of accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocation decisions.

A comptroller or controller is a person who supervises accounting and financial reporting within an organisation. A controller is an accountant in a business who oversees accounting and the implementation and monitoring of internal control.

Accounting Mangers is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

In contrast to financial accountancy information, management accounting information is:

  • usually confidential and used by management, instead of publicly reported;
  • forward-looking, instead of historical;
  • pragmatically computed using extensive management information system and internal controls, instead of complying with accounting standards.

This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making.