What does It Mean To Be A Certified Accountant?
A Certified Public Accountant is a reliable financial advisor who facilitates reaching any company or individual financial goals. To get the CPA certification usually, you will need to acquire 150 college credits and a minimum of 2,000 hours of accounting experience working from the hand of a licensed CPA. As you can see, an accountant with a CPA is a reasonably trained accounting professional with many responsibilities, such as:
- Balance of financial records;
- In charge of carrying out internal and external audits;
- Check for major economic issues.
- Make sure that projects stay within the established budget.
- Work with executives and managers to establish budgets.
But let's start from the beginning, to understand the subject little by little! So what exactly is accounting?, and what do accountants do precisely?
The importance of the Accounting area within a company is essential for its maintenance since it is in charge of analyzing and managing the numbers to generate financial statements, payments, collection, cash flow, among many others. Accountants who work in the business sector can read and interpret a company's financial records correctly. In many cases, accountants are used as consultants to provide professional and valid financial advice to individual clients of the company leader, so they must provide accurate and unbiased information.
There are several types of Accounting, such as Financial Accounting, Management Accounting, Public Accounting, Gouvernment Accounting, Cost Accounting, Tax Accounting, Auditing, among many, many others. Did you even know about Forensic Accounting? Very interesting, right?! Check out accountants in business here!
If you want to study accounting, you also have to consider that any accounting position will require full compliance with all government regulations and accounting standards.
How do I know if I want to study accounting?
Most of us have many doubts about choosing our career path. Believe us when we say you are not alone in this boat! However, to help you resolve that question, we will give you some signs that may indicate that you were born to be an accountant!
- You like the numbers, and you consider you are good at them.
- You see yourself working in a company.
- You don't rule out being your own boss one day.
- You are risky when making decisions, or you make decisions quickly.
- You are a person with a lot of adaptabilities.
- You have an excellent capacity for mathematical reasoning and analysis.
If most of the above points provoked an inner "YES," perhaps you should not lose sight of your pursuing a career in accounting!
What are accounting standards in Canada?
Accounting standards are called technological standards since they belong to the international regulation of economic systems. In Canada, they are traditional standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP).
What do generally accepted accounting principles (GAAP) stand for?
Generally Accepted Accounting Principles (or GAAP) are popular accounting rules and standards for financial reporting, and they ensure a transparent and consistent situation from one organization to another. In Canada, companies can choose which accounting standards to use. They choose three options for their external financial reporting:
- Accounting Standards for Private Enterprises (ASPE): Are mainly directed at small and medium private organizations (also called SMEs) in Canada. Learn more here!
- International Financial Reporting Standards (IFRS): Its goal is to make financial statements coherent and consistent across different industries and countries. In Canada, public companies must use the IFRS. For more information, click here.
- And lastly, Canadian companies can also choose the GAAP.
But for all this, what are accounting standards for?
Accounting standards mainly specify how to recognize, analyze and present financial statements. Their main objective is to provide essential financial information to investors and contributors in an accessible way to make good decisions about the company's direction.
Why are accounting standards necessary?
Accounting standards are necessary because accounting has to be accurate! The financial information must be truthful so that outside persons can evaluate it, and the only way for this to happen is by following the accounting standards. Investors and regulators can understand what they read when accounting standards are followed. Fantastic to have a universal accounting language!
Get familiarized with GAAP!
Now it's time for you to get more familiarized with the Canadian Generally Accepted Accounting Principles (GAAP). But to keep you focused, let's play a little game to refresh that memory! Complete the main concepts of GAAP with the help of their definitions.
- Matching principle
- Going concern
- Time period principle
- Full Disclosure Principle
- Objectivity principle
- Principle of conservatism
- Revenue recognition principle
- Consistency principle
- Cost principle
- Materiality principle
- Business entity concept
- The _____________ _____________ (two words) is part of the generally accepted accounting principles in accounting. Assets should always be recorded at their cost, when the asset is new, and for its life.
- The _____________ of _____________ (two words) is the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the result, but only recognizing income and assets when it is ensured that they have already been received.
- The _____________ _____________ _____________ (three words) is part of accrual accounting and the matching principle. Both principles determine the accounting period in which income and expenses are recognized.
- The _____________ _____________ (two words) is part of the Generally Accepted Accounting Principles (GAAP), based on the cause-and-effect relationship between spending and earning. It requires that any expenses incurred be recorded in the same period as the related income.
- In accounting, a business and its owners are treated as two separately identifiable parties. This is called the _____________ _____________ _____________. (three words)
- The _____________ _____________ (two words) states that we should use only verifiable information in the books. The accounting world operates under a set of suppositions that accountants can always assume to be true.
- The _____________ _____________ (two words) states that we can ignore an accounting standard if it has a minor impact on the financial statements. It refers to the effect of omission.
- The _____________ _____________ (two words) states that once a company adopts an accounting principle or method, it must continue following it in future accounting periods. Figures that are very concerned by this principle are the auditors.
- The _____________ _____________ (two words) is an accounting term that represents a financially stable company, that meet its obligations and continue its business for the future.
- The _____________ _____________ _____________ (three words) explains that a business should report the financial results of its activities over a standard time period, either monthly, quarterly, or annually.
- The _____________ _____________ _____________ (three words) states that all relevant and necessary information for understanding a company must be included in all financial statements.
So, after becoming familiar with the Canadian accounting standards and the GAAPs, you may wonder: And what is the use of knowing all this?
Suppose you are studying accounting or you are already an accountant on the way. In both cases, you must familiarize yourself with these concepts since they provide crucial information you will need to understand to make money and make a business grow! In short, if you do not understand the basic principles of accounting, you will never be able to run a business or help a business grow!
Take online accounting courses here on Superprof.
What Does It Take To Work In The Industry?
Although you already know that the accounting world has many certifications, we will make your life a little easier. We will summarize some of them so that you can calmly decide where you want to go, especially if you're pursuing your professional life career in Canada.
These accounting certifications will have a diverse professional focus. Depending on your career goals, some of these accounting certifications will be perfect for you, while others will not be as tailored to what you are looking for. Let's take a closer look!
- Public Accountant Certification: In Canada, this is the highest certification for public accounting. A certified public accountant (CPA) opens up taxation, auditing, regulatory compliance, and financial analysis job opportunities. That means that obtaining a CPA is essential for building a career in accounting.
- Certified Management Accountant (CMA) Certification: A CMA certification proves that an accountant has financial accounting and strategic management expertise. Another good point is that this certification also has global recognition.
- Internal Auditor Certification (CIA): The Certified Internal Auditor is aimed mainly at those accountants who want to specialize in internal auditing. It encompasses internal audit theory, knowledge of International standards, the execution of internal audit work, risk control, governance, and technology.
- Chartered Financial Analyst Certification: This certification provides accountants with advanced investment analysis, management skills, decision-making, research analysis, and portfolio management. CFA accountants work in investment and commercial banking and consulting.
- Chartered Financial Consultant (ChFC) Certification: With this certification, accountants can work in the financial services and insurance industries, providing financial planning, expertise on income tax, retirement, risk management, and investments.
- Chartered Global Management Accountant (CGMA) designation: The CGMA designation demonstrates that you're a reliable expert strategist. You will be recognized globally as a chartered management accountant with this credential.
- Financial Planner (CFP) Certification: The CFP is a professional certification for financial planners. This certification is the world's most recognized financial planning designation and is considered the gold standard.
- Chartered Alternative Investment Analyst (CAIA) Certification: The CAIA is directed to financial professionals who focus on pension funds, foundations, investment decision-making capacity (including analyst, portfolio manager, and asset consultant).
- Chartered Certified Accountant (ACCA) Certification: It is a global body for professional accountants. A chartered accountant has a high-level professional accreditation and has gained good professional experience. With the ACCA, you can pursue a consulting, advising, fund management, and taxation job.
Is it really worth it to pursue an Accounting certification?
Certification is always worth it, ALWAYS! To become a recognized accounting professional, you must know different subjects, such as government regulations and business risk analysis. In Canada, getting certified will provide you with a wide variety of job opportunities, job security, and a higher income.
In addition, if you obtain any of these accounting certifications, you will have a differentiating factor among other applicants, so companies will highly value your profile if you decide to work in a company or organization. Obtaining any of the certifications mentioned above will set you up for success!
We know that you must go through various processes before obtaining one of the certifications, such as a Bachelor's program from an accredited university in Canada, enrollment in the CPA professional education program, acquiring relevant accounting experience, and approval of the Uniform Assessment (EU) exam. However, it is not the time to get discouraged because even if the path takes a little time, we are sure that shortly you will be happy to have decided on this path!
Get to know the skills that any accountant should have!
Because there are different professional paths in accounting, with the necessary studies and professional experience, you will adapt to any job you want. However, your profile must have specific characteristics and skills that differentiate you from the rest, making your life easier.
- Excellent communication: It is important that among the skills of an accountant, he knows how to communicate clearly and precisely, mainly since he handles sensitive financial information. Having good communication will be able to explain in a better way the concepts that perhaps are simple for you, but that indeed a person who has not studied accounting does not know.
- A very ethical person: As an accountant, you can access confidential information handled with professionalism and privacy. In this case, ethics becomes a crucial skill. The accountant is expected to have moral integrity, honesty, and sincerity in his professional practice.
- A person that commits: Because the accountant is the middle point between clients, investors, financial institutions, and the company, his role of work commitment is considered one of the priority skills within his profile.
- A proactive profile: This is another essential skill for an accountant, as it can often lead to job success or failure. In accounting and every profession, you have to take action, and responsibility, be proactive and seek solutions to problems or difficulties.
- All you need is adaptability: As you may have realized in recent months, we live in a world of constant change. Among the skills of an accountant, it is crucial to find a way to anticipate possible financial changes and remain calm in complicated situations. There is no better way to face the future than flexibility, if not the only way.
What are the Three Golden Rules Of Accounting?
Unsurprisingly, in a field that is determined by hundreds of accounting procedures, there are some rules that every professional accountant must follow when performing their tasks and duties.
While they may seem like simple rules, they are not always as straightforward as accountants would often prefer. Let's get to know them so that when you finish this article, you will only need the diploma to practice accounting! The golden rules are listed below:
The Three Golden Rules
- Debit The Receiver, Credit The Giver:
When we talk about a personal account, when a company receives something from another company, the first becomes the receiver, and the second business, the giver. In this case, we use the Golden Rule 1, which states: Debit the receiver, credit the giver. Applying this rule, the accounting books should reflect a debit on the personal account and a credit on the business account.
- Debit What Comes In, Credit What Goes Out:
This principle is applied in the case of real accounts. Real accounts involve machinery, land, and building, etc. They have a debit balance by default. Thus we apply the Golden Rule 2, which states: When you debit what comes in, you add to the existing account balance. Similarly, you reduce the account balance when a tangible asset goes out of the organization when you credit what goes out.
- Debit All Expenses And Losses, Credit All Incomes And Gains:
This rule is applied when the account in question is a nominal account. The capital of the company is a liability. Therefore it has a default credit balance. When you credit all incomes and gains, you increase the capital, and by debiting expenses and losses, you decrease it. Golden Rule 3 states: Debit all expenses and losses, credit all incomes and gains. This means that if a business incurs a loss or expense, then the books' respective entry is represented as a debit. If the company earns profit, then the entry in the book is defined as credit. If you want to learn more, click on Management Study Guide!
Accountants, particularly those who deal with bookkeeping, must know the golden rules of accounting by heart. By using these rules, any accountant will interpret the financial information better. It will facilitate the allocation of transactions in each account and the correct spot, providing a summary of the company's gains and losses.
Difference between bookkeeping and accounting!
Perhaps now that the concept of bookkeeping has emerged, you wonder what the difference is between it and accounting.
Bookkeeping is related to the recording and identification of the financial data of a company. Bookkeepers are in charge of recording the data and the financial information, while accountants are more involved in analyzing, classifying, and interpreting this information. Through accounting, we can summarize financial data and report it.
Are you interested in pursuing a career as a bookkeeper? In Canada, you can get the CPB designation, a national standard of excellence for bookkeepers. With a CPB license, you will provide bookkeeping services to small businesses and nonprofit organizations.
Start learning Accounting in Canada!
Are you ready for your future to shine like a diamond? Do you want to prepare yourself as best as possible to aspire to the best professional options? Was this article the signal you were looking for to start your path to accounting? Perhaps you can achieve all this and more by starting to study Accounting from this moment!
Discover the accountant inside you and find the answer to all your questions! Having a good accounting tutor can help you develop many skills that will help you perform better in professional accounting. Find the best accounting tutoring in Canada with Superprof!
Superprof is a magnificent platform where you can study from Mandarin Chinese to the basic principles of accounting. You are no longer alone if you are looking to prepare yourself better to pass any accounting certifications, no matter how difficult it is to obtain them.
With Superprof, you can find the ideal private tutor to learn accounting in any city in Canada! Through online or face-to-face classes or a mixture of both with Superprof, you will find the best accounting tutor adapted to your needs and goals.
Enter the official website of Canada and discover thousands of private accounting masters! Find the best accounting courses online! You have your future in your hands. Find out about the top accounting institutes here if you are ready to go!
And lastly, but not least, the cherry on top of the cake is here:
Answers to the Generally Accepted Accounting Principles (GAAP) activity. Your welcome!
- Cost principle
- Principle of conservatism
- Revenue recognition principle
- Matching principle
- Business entity concept
- Objectivity principle
- Materiality principle
- Consistency principle
- Going concern
- Time period principle
- Full Disclosure Principle
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