Math. Numbers. Taxes.
When it comes to the concept of accounting, you probably think of some combination of the above words. You understand the relative idea of the term, but what does it mean in terms of an actual career path? Are there multiple different types of accountants—and how does the field fit into the greater business landscape?
Here's a breakdown of all things accounting, and an introduction to why it can be a great field of study for the right type of student.
What is accounting?
A simple definition of accounting is the activity of keeping records of the money a person or organization earns and spends. It can also be described as managing financial accounts—whether those are individually owned or owned by a corporation or business.
Understanding some other key accounting terms can help you put this definition in context, and get a better idea of what the profession itself entails. Here are some helpful terms from the The New York State Society of CPAs.1
What are some key accounting terms?
Account
A formal record that represents—in words, money, or another unit of measurement—certain resources or claims to resources, as well as any transactions or events that cause changes to those resources.
Accountant
A person or virtual accounting software skilled in the recording and reporting of financial transactions.
Certified public accountant (CPA)
A licensed professional who has passed an examination administered by a state's Board of Accountancy.
Accounting cycle
Steps followed in the accounting process to measure business transactions, and transform those measurements into financial statements.
Financial statements
The presentation of financial data such as a balance sheet, income statement or cash flow statement, plus any other supporting statements that communicate an entity's financial position at a specific point in time or over a given accounting period.
Audit
An examination of a company’s financial statement by a professional accountant to determine that the statement was both presented fairly and prepared using generally accepted accounting principles (GAAP).
Where do accountants work?
Contrary to common perception, accounting isn't just doing taxes. There are many different types of accountants who specialize in different areas, as well as a ton of different settings where they can work.
The reason there's so much variety? Organizations of all kinds—from family-owned bakeries to publicly traded companies—need accountants. This allows aspiring accountants to not only pursue the specific type of accounting that interests them, but also to do it for a business that aligns with their interests and passions.
What is the role of accounting in business?
The actual role and impact of an accountant on an individual's or business's finances changes depending on the type of accountant and the type of business you're discussing. But generally speaking, it all ties back to that initial definition: An accountant is responsible for recording the money that goes into—and out of—an organization's or individual's bank accounts.
This record-keeping affects everything from tax planning to business decisions to a company's financial health, and that's why having a great accountant to record (and report) your financial statements and transactions can be so important.
What are the different types of accounting?
Given how many different types of individuals and organizations require accountants, there are a range of different types of accounting that an aspiring accountant can study or specialize in. Here are some of the most common types of accounting you may come across in your searches, and a little bit about what each one entails.
For each role here, please note that different or additional education, certification, and work experience may be required. It is important to check these requirements prior to enrolling in a program. Rasmussen University’s Accounting Certificate, Accounting Associate’s and Accounting Bachelor’s degree programs do not meet the educational requirements for licensure as a Certified Public Accountant (CPA) in any state.
Forensic accounting
Consists of the analysis of financial records and financial reports and to ensure they’re compliant with standards and laws, as well as uncover any errors, omissions or cases of fraud. Different/additional education, certification, and work experience may be required for this role.
Cost accounting
Procedures used for classifying, recording and allocating current or predicted costs that relate to an organization's products or production processes.
Tax accounting
A subset of accounting centered around the preparation of tax returns and tax payments for individuals, businesses and other entities.
Government accounting
Involves the recording and managing of financial transactions incurred by the government at the federal, state and local levels. It can involve anything from overseeing public funds to investigating white-collar crime to performing audits.
Nonprofit accounting
Involves the planning, recording and reporting of finances specifically for nonprofit organizations.
International accounting
The recording and tracking of financial information for international companies, often according to a set of standards called the International Financial Reporting Standards® (IFRS).
Investment accounting
A type of accounting focused on financial investments and portfolios. Investment accounting typically involves working closely with investment and portfolio managers at brokerage and asset firms.
Financial accounting
The process of preparing a company's financial statements to show their financial performance and position to people outside the company, including investors, creditors, suppliers or customers.
Management accounting
Also called managerial accounting, this type of accounting involves preparing detailed reports and forecasts for managers inside the company, which is a big part of what differentiates it from financial accounting.
What are some common accounting job titles?
As you may have guessed, each of the types of accounting listed above translate to a different job title or pathway. From forensic accountants to tax accountants and nonprofit accountants to managerial accountants, each subset relates to a type of accounting role you can pursue.
There are also a bunch of jobs that fall into the broader accounting field but aren't as straightforward as simply being "an accountant." Here are some other common roles that may require (or encourage) candidates to hold accounting degrees:
- Auditor
- Financial analyst
- Bookkeeper
- Accounting Clerk
- Auditing Clerk
- Accounts Payable
- Accounts Receivable
Learning a little more about each of these roles can give you a better idea of the different job titles and careers you can explore if you choose to pursue higher education in accounting.
Why is accounting a good field to study?
Now that you know some more about what accounting is, let's talk about why it might be a field you should consider studying. Here are a few reasons why it can be a great pathway to pursue.
Accounting jobs are generally considered reliable
As we mentioned earlier, everyone needs accountants. That doesn't just mean there's a high demand for accounting graduates, it means that the jobs they receive should be—in the grand scheme of things—relatively stable and reliable.
There are plenty of pathways to explore
From the type of accountant you choose to become to the type of organization you choose to work for, there are plenty of accounting niches to explore—and lot of room to move around once you get started. It's a career path with many possibilities, and that usually means there's a lot of room to grow.
It opens the door to further education
From an accounting certificate or associate's degree in accounting to a bachelor's degree in accounting, there are accounting program options at pretty much every education level. This means that once you take the first step, there's always more you can achieve.
It's a skill you can use for the rest of your life
A great thing about studying accounting is that it's a useful life skill as much as it is a profession. Everyone has to pay taxes, and everyone has to manage their financial accounts. An accounting education will be something you can continue to rely on for yourself, your family, and even private or freelance clients later in life.
What else should I learn about accounting?
You've got the basics down, but there's still more to learn about this exciting career path. For an idea of the daily roles and responsibilities of an accountant, check out our article "What Does an Accountant Do? A Look Beyond the Ledger."
International Financial Reporting Standards® is a registered trademark of INTERNATIONAL FINANCIAL REPORTING STANDARDS FOUNDATION
1 NYS Society of CPAs (NYSSCPA), Accounting Terminology Guide-Over 1,000 Accounting and Finance Terms, (accessed May 2024), Accounting Terminology Guide - Over 1,000 Accounting and Finance Terms (nysscpa.org)
