It has come to my attention that there is a general confusion about the role of accountants and accounting in business. Recently, a friend of mine pointed out that she was surprised that accountants did something other than handle the company’s taxes and books. In fact, she was under the impression that accountants only worked in the past after the business of the company had been conducted. Fortunately for those interested in pursuing a career in accounting, nothing could be further from the truth. Accounting is a broad field encompassing many aspects of business operations. Although it often works in the past, it is also forward-looking.
According to the Arkansas State University College of Business (2002), the role of accounting is often confused with bookkeeping. It is generally perceived that accountants handle the meticulous record-keeping tasks that are actually the responsibility of bookkeepers. Accountants use data generated from the books and other research to assist management in the decision-making process. Unlike bookkeepers, accountants must do more than simply compile data. Instead, they must analyze the financial data of the company to provide additional information beyond dollars and cents.
There are really two subsets of accounting. Financial accounting is concerned with generating standardized reports to relay the financial health of an organization to its stakeholders. Since financial accountants deal with government regulators, such as the Securities and Exchange Commission (SEC), it is important for financial accountants to adhere to standardized accounting principles such as the GAAP. Management accounting, on the other hand, generates data that is usually kept internal to the organization. The information generated by management accountants is tailored to the needs of the audience and relies on combining information from several sources. Management accounts rely on the same financial data as financial accountants, but combine this information with non-financial data such as manufacturing efficiency, to provide reports helpful in the decision-making process (Aktinson, Kaplan, Matsumura, & Young, 2007).
Since accounting is “often referred to as the language of business” (ASU, 2002, para. 2), you can expect to find accountants staffing many different roles within an organization. A brand new accountant straight out of college can easily find a job as a bank examiner, cost analyst, or revenue agent. Each of these jobs relies on accounting, but performs very different functions based on the organization in which they operate. For anyone interested in pursuing a business career, a fundamental understanding of economics is invaluable (ASU, 2002).
Arkansas State University College of Business. (2002). What is accounting? Retrieved December 1, 2008.
Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M. (2007). Management accounting (5th ed.). Upper Saddle River, NJ: Pearson.