Business Accounting: An Overview
Do you think you know everything there is to know about accounting in the twenty-first century and the basic accounting world?
If you have started a degree in accounting or a similar accounting diploma, then you have probably picked up a lot of the skills and knowledge that are required of you in order to enter an accounting career, and may now just be looking for experience in the finance and business sector. However, if you are a student wondering what is next for you on this path to business accounting, then you may wish to know what the profession entails and what will be expected of you by business, big and small.
A Definition Of Accounting
How do you define accounting, when it such a broad field of business?
Well, some dictionaries and corporate thesauri have tried their best, and we have picked out the one we feel is the most accurate and well-rounded description of accounting.
"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."
As you would expect, there are a number of keywords that crop up when defining accounting: 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.
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Probing Further Into Accounting In Business
What An Accountant Does
Accounting professionals are extremely important in almost all functions of a business, from paying the bills of low-level staff to advising the CEO on important financial decisions. Of course, unless a very small firm, then one individual accountant won't be expected to handle these responsibilities alone.
But it's not just about reporting income and expenditure and doing payroll either, accountants in any sized business will use their accounting skills to compile financial reports, use statistics to enable them to forecast spending, and use existing data in their preparation of budgets and so on.
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, 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
Furthermore, a certified internal auditor helps businesses to prove that they can manage their assets and means that it is easier for them to borrow money should they need it now or in the future.
What Accounting Departments As A Whole Do
The accounting departments in businesses are effectively responsible for knowing where money is at all times, i.e. funds coming in from external parties and all of the money going out, like employees' salaries, buildings costs, advertisements.
Accountant positions encompass a wide range of job functions which make up the accounting teams of businesses, no matter the size or nature of the business.
These job titles include, but are not limited to:
- Accounting Clerk
- Chief Financial Officer
- Financial Analyst
Making Accounting YOUR Business
Accounting may not be everyone's dream career, but the fact is that it can offer a lot of benefits and job security, thanks to the demand of chartered accountants, bookkeepers, auditors and so on.
If you have good numeracy skills, are good at managing money and can analyze figures and information systems then a managerial accounting career (i.e becoming a certified public accountant), bookkeeping position, or accounting clerk could be among the perfect jobs for you to pursue. The ability to understand accounting practices and abide by the generally accepted accounting principles is a must for anybody working at accounting firms or in the corporate accounting and public accounting worlds.
You do not necessarily need a degree in accounting or a business degree to do accountancy work in public accounting firms, which makes it a much more accessible job than some others that expect applicants to have the highest possible level of qualifications. However, you do need an AAT as a minimum prerequisite qualification, which can be complemented with various other diplomas, accounting certificate and accounting degrees.
Those with career goals of having accounting as their business environment, therefore, will be relieved to know that they can major in accounting without spending years studying at university campuses and it costing them a fortune.
In some areas, however, a higher learning degree is desirable, or at least it is deemed very useful. Maths and/or economics are classed as highly advantageous, especially as careers in accounting are in high demand.
There is a range of different qualifications you can take and paths to go down you in order to earn the title of an accountant.
Desirable qualifications include:
- A level maths
- A level economics
- BTEC business studies
Getting Even More Qualified To Work In Accounting
As we've discovered, there are some minimal requirements for being an accountant, like having the AAT qualification, however, there are ways to make you stand out from the rest of the accounting applicants. One of the best ways to do this is to apply to become a member of one of the renowned accounting institutes, which represent accounting professionals and provide worldwide recognition for their knowledge, skills and experience.
Below are just two examples of the accounting institutes that can offer you accreditation in your chosen area of study and work.
If you are interested in learning more about accounting theory through accounting courses like undergraduate programs at universities, then you should look up an institution which offers the examination that you should be preparing for in order to enter the field of work you have set your heart on.
You can usually find details on admission processes for each establishment online, and on completion and acceptance of your application, you would normally be offered further details on semester hours, coursework and exam requirements, if you haven't had these already.
Most accounting courses will cover the fundamental basics of accounting, accounting standards and the ethics of money within the business world.
You can also find online training for personal and business accounting programmes like Sage, Quickbooks and so on.
Be Prepared To Work Your Way Up
As it's impossible to begin any career in your dream post, you have to be realistic and realise that you will need to work your way up.
No matter how advanced your qualifications are, whether you are a university masters graduate or a college graduate having just undertaken the AAT, you could be competing for the same roles as one another due to the fact that neither of you has the relevant experience needed yet to fulfil a role.
Similarly, younger and less academically adorned candidates could be favoured over someone who has various accounting qualifications, particularly if they have spent time working in the field and gaining experience when the other prospective employee has been studying in educational establishments.
So, instead of starting in your perfect position right away, you might need to work your way up from more of an entry-level position.
Training whilst on the job is a very good idea if you are impatient to get your career kick-started because you can kill two birds with one stone: gain the qualifications you need and get some desirable experience under your belt.
Business Accounting: A Summary
Having read the above, you should have a better idea of what accounting means in the business world, but let's recap below.
- Business accounting encompasses the systematic recording, analysing, interpretation and presentation of a company's financial information.
- Accounting responsibilities may be held by one person in a small business, or by different teams in larger organisations.
- Accounting is the way a business keeps track of its financial operations.
- Accountants analyse the business' finances so the owner and any stakeholders can make better-informed decisions.
- Accounting helps business owners meet their compliance obligations.