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Read Unbiased Views on Accounting and Its Uses in Life

by May 10, 2019Accounting0 comments

Most of you have encountered this word in daily life. You have heard of accounting professionals, accounting standards, accounting subjects and so on. This word is not to be missed. Also, called accountancy, ‘it is the measurement, processing and communication of financial information related to businesses and industries’. This is one straightforward definition. Financial reporting, accounting and accountancy are all the same.

There are various sub-divisions in accounting. There is financial accounting, management accounting, cost accounting and tax accounting.

Types of Accounting

  • Financial Accounting

Includes the making of financial statements and then disseminating the information to stakeholders.

  • Management Accounting

It stresses on the analysing, recording and reporting of the financial information within organizational boundaries. It is for internal use.

  • Public Accounting

Is the investigation of financial statements of client companies? It also requires auditing skills. The entire history of the company needs to be known, to ascertain the financial conditions and other factors, relating to the same.

  • Government Accounting

It is totally under the purview of government rules and regulations. Accountants need to have in-depth knowledge to get into this form of accounting.

  • Forensic Accounting

Is a relatively new form of accounting? This involves jotting down all events related to financial transactions and investigating on the same. This is applicable to destroyed businesses and to record fraud transactions.

  • Tax Auditing

Is related to tax regulations, tax filings, planning and more, from company perspective. Tax Managers are generally hired for the post.

  • Internal Auditing

This type of accounting is aimed at controlling various company’s weak areas, fraud, wastage and other factors in a business.

Why do people study accounting?

Famous personalities are present all over the world, who studied accounting as a subject. Some studied accounting or were professional accountants. The study of the subject, gives you a broad perspective about life and additions and subtractions, for that matter. Accounting as a subject, is broadly recognized in most fields today. It has a huge influence, in business and allied fields. By studying accounting, you do not necessarily become a desk-bound person or a traditional accountant, for that matter. Studying accounting opens up a whole new world for students and professionals. You get to record transactions, ledgers, profit and loss statements apart from other interconnected areas.

The careers, you can step into include Finance management, business analysis, business management, investment advisory and risk management. The estimation worldwide, for accounting jobs is approximately 1, 88,100 as of 2015.

Employment Potential of Accounting

A whole range of career options, open up in front of you if you study accounting. You can take on the role of a chartered accountant, chartered management accountant, Company secretary, and forensic accountant apart from other interconnected careers like Actuarial sciences, Management consultant, Mortgage advisor, retail banker and many more. The opportunities for accounting students are endless.

Top 10 Reasons to Study Accounting

Accounting is the most wanted subject, chosen by numerous students who want high-flying careers. No organisations can handle financial decisions, without accountants. Accountants are responsible for all kinds of financial decision making in any company, whatsoever.

  • You need basic math skills. Gone are the days, when numerous calculations had to be done on paper. Nowadays, everything is computerised. You don’t need to memorize complicated formulaes and calculate huge numbers. Everything can be done in a jiffy, through computers.
  • All Industries, located anywhere around the world need accountants. Every company has to follow a set procedure, regarding accounting, maintaining books of accounts, checking their ledgers, issuing bills and receipts to vendors and other stakeholders. Irrespective of the type of business the company is in, they have to hire accountants. Thus, accountant jobs are everywhere. It I a recession-proof industry.  If you are a professional accountant, with the right set of skills, no one can deny you a job and a lucrative career.
  • You can start your own Accountancy Consultancy. If you are professional accountant, equipped with the right set of degrees, you can become an entrepreneur. You can become an independent accountant. Believe me, if you are a professional at your work, then individuals and companies will chase you for role in consulting, for their business. Nowadays, there is so much competition, in the market, that you will definitely find customers.
  • Go abroad. If this is your dream since childhood i.e. to go abroad and work, then this is the right one for you. With international certifications in accounting, you can work in more than 120 countries. Studying Accounting, is your professional road to freedom of movement. Geography cannot bind you.
  • It involves more of consulting and advising clients, less of number calculations. That is because everything is done on computer, nowadays. So, you do not have to sink into numbers, like mathematicians, however you will be advising your clients.
  • Financial year end is always good for you. You will be readily getting offers to do audits and assessment for the financial year. You will have to deal with taxation and financial planning. You will get plenty of offers for the same. This time is extremely busy for accountants. You can vouch for that.
  • Big organisations, ask for volunteers. These organizations are always short on funds, so they need financial advisors to work for them, to advise them about collection strategies and utilization of funds. They can write recommendation letters for you, so that you can apply in high-end companies and MNCs.
  • Your skills will always be in very high demand. Every place, where money is involved will require an accountant.
  • It is recession-proof industry. When, hard times the company’s layoff, sales, marketing and other teams to cut cost. However, very rarely you will see an accountant being laid off.
  • Real-Life application is another forte of accounting as a subject. It is a practical-oriented subject that which has realistic applications.

Is Accounting Hard to catch up with?

Some sections of society have this question in mind. Some students think, accounting is really difficult to catch up with. There is a certain scare attached to the subject – accounting. Those who study arts or science, will not find it interesting. They might say, it is a difficult subject. Well, if you don’t love anything, how will that thing love you back? If you do not find something interesting, then how can you find it easy? It will appear difficult for you. It is the same, with all subjects.

So, Accounting as a subject is hard for some and easy for some. It totally depends on individual characteristic. Actually, it is a very memorization-oriented subject. It requires lots of remembering, definitions and mechanics. It is related to mechanical subjects.

Accounting involves, concepts like credits, debits, double entry, single entry, assets, liabilities, equity and T-accounts. You have to understand the basic first. It is the same in any subject. You have to get your fundamentals strong, then only you can move up the ladder to far-more important things.

Secondly, practice is as important. If you study one topic in class and forget all about it, you cannot get into accounting. You have to practice a lot of problems and find out their solutions. Some people fear, it is only related to mathematics. That is not the case, I would like to tell you. It consists of basic arithmetic, rest of it is concept related.

For somebody, like me, who has also done CPA, I always found the subject interesting enough. It is like solving crossword puzzles and it is one of the best ways to become an accountant.

Nowadays, some people have this query, ‘Do I have to be good in math?” No, just get your basics right. That will be all. Accounting is an exact science. It uses the numbers and set formulaes to get answers to specific questions.

Similarities and Dissimilarities of Math and Accounting De-coded

Both the subjects, rely on numbers and there are problems that need to be solved. However, the approach to both subjects is different. There is a purpose behind everything that you do in accounting. Why we do math, is a huge question mark. However, there is an answer to accountancy. Why are we studying accountancy, there is a definite answer?

Accounting Terminologies worth Mentioning for the Layman

  • Account is a formal record of money, like where from it has come, where it will be credited and other associated events.
  • Account Payable is the amount that you need to pay to a creditor, for the services that person gave you or goods.
  • Account Receivable is another term, very frequently used. It means claims against a debtor. Somebody owes you money, as you had rendered some services to someone.
  • Accounting Cycle is another important term that you will come across very frequently. There is a specific time, in which all accounting processes happen. These happen in cycles.
  • Accrual Accounting is an attempt to record financial effects of the transactions in the period.
  • Accrued Expense is an expense that has happened, but it is not registered.
  • Accrued Interest is another term, related to sale of a bond or scheme.
  • Balance sheet is another important part of business. It records various formulaes, assets, liabilities, equity, and capitals. The financial health of an organization can be found out from the balance sheet. It denotes the overall health.
  • General Ledger is another important part of accounts. It is that side of book-keeping that contains balance sheet and income statement accounts. The business transactions are all recorded here. It includes credit, sales, purchases, office expenses and income losses.
  • Trial Balance is another important part of accounting. It is a book-keeping worksheet, in which the balances of all ledgers are accumulated into credit and debit accounts transactions. A company generally forms a trial balance, periodwise. The aim to prepare the trial balance, is to see that all aspects of the book keeping is mathematically correct.
  • Debits and Credits
  • At the end of each accounting period, there should be a proper debit balance between assets, expense or the loss should have a debit balance. Then there are accounts of liability, revenue, equity or a gains which should have credit balances. On the trial balance sheet, all debits are listed on the left and all credits are listed on the right.

Real Life and Accounting

  • The accounting skills can be used to analyse the grades that you get in various subjects. That data is recorded and summary is drawn on a computer. Then, an expert can pinpoint and tell, which subjects you need to pay more attention to. Then, you can focus more on those subjects and achieve a break through. You can further, break down the data and further analyse how much time, you need to put in to the study for each subject.
  • If you want to manage your spending habits, get help from accounting. You can list out what are your assets and liabilities and likewise, you can draw out a plan. If your cash outflows are higher than your cash inflows, you need to curb that. This is what accounting will show you.
  • When you will make smart investment in SIP, mutual funds and the likes, you need accounting advice. So, if you know accounting yourself, it is far easier. You need to check the profitability, liquidity and debt ratios of the transactions that you will be getting involved in. You can then analyse, which companies you should invest in and which, you should not. So, its is gain-gain situation for you.

So, by studying accounting, as a subject is good for your life and professional career in every manner possible. It is the best that you can do for a full-fledged long time career in the times of today’s global 21st century state. 

Author Bio

Michelle Johnson is a highly experienced academic professional, with 6 years of experience in the corporate and academic sector, together. She has graduated from Stanford University, with MBA and Accounting as major subjects. She has a different take on the subject and teaches it through her own methodologies, which are well conceived by students.