Accountant

Updated on April 9, 2024
Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

Accountant Definition

An accountant is a finance professional who records business transactions, issues financial statements and reports a firm’s performance. They scrutinize the inflow and outflow of cash. In addition, they ensure that transactions are legal and compliant with tax regulations. They must be adept with ethical standards such as International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).

Accountant

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A financial accountant identifies potential tax write-offs and opportunities for maximizing profits. They start as entry-level accountants and gradually become managers and partners. A finance professional involved in filing documents with the U.S. Securities and Exchange Commission (SEC) has to be a certified public accountant (CPA). Most accountants strive to get licensed as a Certified Public Accountant (CPA) as it is considered the pinnacle in the field.

Key Takeaways

  • Accountants utilize their accounting, finance, law, and business knowledge to formulate accurate financial statements. They analyze the financial health of an individual or a company.
  • Their responsibilities include recording financial transactions, forming financial statements, analyzing financial performance, auditing, and reporting.
  • The superior skills that an accounting professional should possess include communication skills, analytical ability, critical thinking, computer knowledge, mathematical skills, business understanding, and keeping up with corporate laws and taxation.

How does an Accountant Work?

An accountant is a professional in the field of accounting who scrutinizes the inflow and outflow of cash and assists in the auditing process during yearly filing. Moreover, they also have an in-depth understanding of tax regulations and legal compliances as they ensure their company is abiding by those laws and regulations to avoid any scrutiny from regulatory authorities.

A certified management accountant scrutinizes a company’s revenues and expenses to ensure that all the transactions are compliant with regulations. As such, they are required to handle numerous responsibilities. Multinational companies have a dedicated accounting department comprising many professionals. But a small firm may operate with only one accounting professional directly reporting to the regional head.

Usually, these professionals work from offices, but some companies offer the flexibility to work from home. In some cases, they might even travel frequently to meet clients. These professionals work 40 hours a week; some profiles require longer schedules. During tax filing deadlines or budgeting, the workload is higher.

Historically speaking, accounting roles witnessed significant growth during the time of the industrial revolution. Businesses were becoming complex; stakeholders questioned the returns from their investment. Further, after the 1929 Great Depression, the Securities and Exchange Commission (SEC) was formed in the U.S. Consequently, all publicly-traded companies were required to employ qualified accounting professionals to publish financial reports. This regulatory change further increased the need for professionals. As a result, accounting personnel have become a ubiquitous part of the business.

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How to Become?

While most jurisdictions accept an accountant degree, there can be specific requirements for different levels of working as an accountant. If an accountant wants to file accounts with the Securities and Exchange Commission (SEC), they must be a Certified Public Accountant (CPA). Let us understand how one can become an accountant through the discussion below.

#1 – Qualification

Aspirants require a degree course in accounting. However, many companies prefer accounting graduates, and thus, aspirants can pursue three-year studies that offer a bachelor’s degree in accounting. Alternatively, aspirants can also choose an associate degree course. Upon completion, they can pursue a two years advanced program—a master’s degree in finance, business administration, commerce, or accounting.

Top destinations for accounting include the University of Texas, Austin; Brigham Young University, Provo; and the University of Illinois, Champaign.

#2 – Certifications

Aspirants can get certified as Certified Public Accountants (CPA), Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Chartered Certified Accountant (ACCA), Certified Management Accountant (CMA), or Chartered Financial Consultant (ChFC). Certifications improve the potential career options available to an aspirant.

#3 – Skills

Accounting professionals require a refined understanding of corporate laws, taxation, and business practices. To succeed in this profession, individuals must be competent mathematically and possesses analytical abilities. They must also be comfortable with computers and software like Freshbooks, Quickbooks, and Xero.

Functions

A financial accountant plays multiple roles within an organization from documentation to analysis and tax regulations. Let us understand their functions, roles, and responsibilities through the explanation below.

Accountant Job

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  1. Recording the company’s financial transactions;
  2. Preparing financial statementsincome statement, cash flow statement and balance sheet.
  3. Auditing and reporting the financial health of the entity.
  4. Updating the book of accounts.
  5. Assisting auditors.
  6. Keeping track of expenses.
  7. Comparing budgeted expenditure and actual spendings.
  8. Supervising the entry of financial data into the ERP systems.
  9. Recommending secure software to clients.  
  10. Risk analysis.
  11. Implying fair accounting practices and procedures.
  12. Adhering with the taxation laws and government regulations.
  13. Suggesting ways for cost reduction and maximizing profits.
  14. Filing tax returns.

Job Outlook

Aspiring certified management accountants find opportunities both in the public sector and the private sector. In-house industry professionals take care of accounting and auditing for a company. Public accountants manage accounts for various clients. Accounting professionals working for the government could be employed at local, state, or federal levels. They keep an account of public funds, i.e., the government revenues and expenditures.

With experience, accounting professionals graduate to finance manager, financial controller, chief financial officer, chartered accountant, or finance director roles. Moreover, as a nation’s economy grows, it accelerates employment opportunities in the accounting sector. In the next ten years, i.e., from 2020 to 2030, the U.S. expects phenomenal employment growth of 7%  for accounting and audit professionals—135,000 new jobs.

The demand for work in this domain is virtually never-ending as there is a requirement across levels of the economy in both private and public sectors right from entry-level jobs to top managerial positions.

Accountant Salary

Despite the fact that the salary for a financial accountant can vary depending on their qualifications, experience, and the nature of their work, let us take a look at the average salary through the official data acquired.

As of 2021, accounting professionals average $60,057 a year. This data was computed by averaging the salaries of 26,210 anonymous professionals. Their annual salaries ranged from $41000 to $88000.

Moreover, an entry-level professional earns $45,192 every year. A junior accounting professional makes $49,206 a year. The average base pay of accounting professionals at Google is $1,24,003 a year. Similarly, companies like PwC and Deloitte average $68,311 every year.

Frequently Asked Questions (FAQs)

What skills do accountants need?

They should possess multiple skills such as accounting and finance, analytical and mathematical skills, communication skills, computer proficiency, business know-how, time management, and a clear understanding of corporate laws and taxation.

Is accounting hard?

Accounting is a discipline that demands extensive knowledge of accounts, finance, business, and law. Therefore, it is all about excelling in the various skills and abilities required for becoming an accountant. Moreover, with continuous practice, one might develop a keen interest in the profession, making it easier.

What are the five careers in accounting?

These professionals have expertise in finance and accounts. They serve individuals, business entities, and government organizations. Their roles include the recording, classifying, and summarizing of financial transactions. The primary objective is to report financial performance accurately. The five trending career options include auditor, financial accountant, tax accountant, financial analyst, and management accountant.

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