Build your talent stack in Accounting Management.
Welcome to the Accounting Stack. This free online course is designed to help students further expand their talent stack with an introduction to the accounting sector. We will cover a general overview and the foundations of accounting. Then we will dive into changes and opportunities that are taking place in the field. We will finish out on how to make strides in building up your Accounting Stack.
This online course will direct students to free videos, podcasts, and resources. Each section will offer two to three hours of learning material to build up your accounting stack.
At the end of each section, students will get an opportunity to invest in their learning, as quality financial information can be utilized both professionally and personally. While this free online course can stand alone as a great introduction to the complex field of accounting, we encourage each student to keep in mind how they can use this experience to continue building their talent stack and maybe enter into an advanced degree like an MBA.
The World of Accounting Management
Accounting is the recording of an organization’s financial transactions through summarizing, analyzing, and reporting. Accountants in the United States use Generally Accepted Accounting Principles or GAAP for financial statements, which are standards and principles for consistency and comparability of financial reporting.
At its core, GAAP is based on double-entry bookkeeping, which we’ll discuss more in the foundation’s section because of its vital role in the accounting field. When an organization sends an invoice to a client, the accountant notes that as a debit in their accounts receivables. It also notes it as a credit for sales revenue.
The accounts receivables go to a balance sheet, while the credit to sales revenue goes to an income statement. Once that invoice is paid, the accountant then credits the account receivables and debits the sales revenue, ensuring that the entry is balanced in the organization’s general ledger.
If you’d like to learn more about GAAP and what it covers, you can read more about it here.
In 2009, the Financial Accounting Standards Board (FASB) Codification was established as the source for all GAAP. Basically, FASB simply organizes GAAP topics into a more easily accessible format.
You can spend some time drilling down on GAAP with the free FASB codification access, though you will have to register to use it. First, be sure to read through the Basic View User Guide to familiarize yourself with navigating the FASB.
Types of Accounting
There are three main types of accounting: financial accounting, managerial accounting, and cost accounting.
Financial accounting generates financial statements from transactions during a particular period. These transactions are summarized with balance sheets, income statements, and cash flow statements. Financial accounting is heavily audited.
Managerial accounting is similar to financial accounting in terms of the data used. But managerial accounting organizes and applies the data differently. A managerial accountant creates regular reports, often monthly or quarterly, to help their organization’s management team make decisions regarding operations.
You can go more in-depth on the differences between financial accounting and managerial accounting with this article.
The third type of accounting is cost accounting, which looks at all the cost data related to the production of a product. In financial accounting and managerial accounting, the cost is used as a measure of performance. But in cost accounting, it’s an economic factor.
Pick up a copy of the Generally Accepted Accounting Principles Guidebook course and build up your understanding of the foundation on which financial accounting reporting is based. Since the GAAP documents are immense and it is difficult to find what you’re looking for, the guidebook makes finding what you’re looking for easier. The guidebook course has a lot of practical examples of how you’d apply GAAP, in addition to tips, an overview of crucial accounting topics, and a dive into the FASB Codification source documents.
Foundations of Accounting
Accounting has a history dating back to the ancient Babylonian, Chinese, Egyptian, Mesopotamian, and Roman empires, which used simplified forms of double-entry bookkeeping.
The earliest discovery of accounting is from 3300 BC; archaeologists discovered clay tablets used for accounting in what is present-day Iraq. They figured out that the earliest accounting was to track the commodities of crop and herd growth in order to predict if there would be enough or a shortage, which therefore determined the price of said commodities.
The history is fascinating; you can read more about it in this BBC article.
By 27 BC, Roman Emperor Caesar Augustus recorded financial transactions in a time we know today as The Deed of the Divine Augustus. He listed transactions such as construction projects, what he spent on entertainment, and what was given in terms of land grants, military pensions, and religious offerings.
It was in 1494 that Luca Pacioli, a mathematician, published the first known book on double-entry bookkeeping that detailed the concepts of the method.
Since it’s so foundational to the field of accounting, let’s take a closer look at double-entry bookkeeping. But first, it’s essential to clarify the difference between bookkeeping and accounting. Bookkeeping is how you track, record, and categorize your transactions. Accounting is what you do with the financial data from that tracking using summaries, analysis, and reporting.
At its core, with double-entry bookkeeping, for every entry to make into an account, you must also make an opposite but corresponding entry into a different account. The result is a credit in one account and a debit in another, thus ensuring that your organization’s accounts are both balanced and an accurate representation of how the organization is doing financially.
This Corporate Finance Institute article will take you further into the world of double bookkeeping. And this Double Entry Bookkeeping article will give you an example of how to set up and keep a Chart of Accounts.
Modern accounting, however, was developed in the early 1800s and the Industrial Revolution. The increased scale of goods and services in the Industrial Revolution meant that merchants needed new ways to track records and stay financially solvent. Then, in 1880, accounting as a profession was recognized by the Institute of Chartered Accountants of England and Wales. This institute codified systems that are still used in the accounting field today.
In the U.S., the 16th amendment was ratified in 1913, which created a federal income tax that all working individuals must pay in addition to the corporate tax passed just a few years before. Many people did not understand how the taxes worked. Coupled with heavy resistance to these taxes, there were many errors, or they simply weren’t being done. Accountants themselves were also in the dark, with no clear standards or guidance.
If you’re curious about the history of taxes in the U.S., the rise of modern accounting, and how things evolved to where they are today, you can learn more in this article on financial history. Check out the other articles linked to gain a deeper perspective on all the elements in play when it comes to tax accounting history.
Tax accounting is, unsurprisingly, a vast segment of the accounting field. But it’s also something lay people need to understand, at least to a degree, as well. H&R Block offers a 12-week online income tax preparation course. While you can certainly use it for your income tax edification, you can also leverage the knowledge gained when it comes to building your accounting stack and developing an accounting career. The course itself is free, though you may have to pay to purchase course materials (depending on your state).
Changes in Accounting
There’s no escaping the new landscape that the COVID-19 pandemic has created for (perhaps all) industries. Accounting is no exception to these changes wrought. From cloud-based technologies to soft skills for accountants, the field has seen significant shifts in the past year in an industry that has traditionally been relatively slow-moving.
This article from Finance Magnates covers some of these changes that accountants have been adapting to over the past year. And the reality is many of these changes are likely to stick around or continue to evolve. Going back to how things were, in many respects, isn’t happening.
Automation is happening across many industries, including accounting. And for a good reason. Especially in a field like accounting, where precision is vital, and mistakes can have significant ramifications, automation provides a safeguard against human error. However, computers and networks are vulnerable to security issues.
And there are some things, like fraud, that technology is not yet capable of identifying in the same way humans are. So, while automation is changing the field of accounting, there is still a need for roles, like internal auditors, that can still only be filled by living, breathing people, at least for the moment. But for something like bookkeeping, in particular, there’s a solid space in the field right now for automation.
Botkeeper is one example of accounting automation that is happening in accounting. In this podcast interview, Louie Balasny, co-founder of Botkeeper, discusses how law firms might consider using an automated bookkeeping platform. In the interview, Balasny and Legal Toolkit host Jared Correia discuss questions about efficiency, security, and support and how automation can help firms gain a better understanding of their finances. While this interview focuses on legal accounting, these topics can be applied to any number of other fields, all of which rely on accountants to keep their finances in order.
This article also covers some high-level ways automation is changing the accounting field, as well as some suggestions for how accountants can handle these changes. This change to automation isn’t happening overnight and provides opportunities for accountants to make changes and advancements to their talent stacks. As we mentioned before, automation isn’t going to wipe out accountants, but it is going to change how accountants do their work and what work they do.
But what is FinTech? FinTech is a portmanteau for the technological innovations in finance – literally “Financial Technology.” Technological advancement, like the automation we’ve discussed, has caused a level of cost structures but removed the so-called middle-man, democratization of services, and an easier way for organizations to understand their finances through user-friendly platforms.
Holland Fintech does financial tech and released this summary of expectations for 2021 across financial fields. As you read, consider the predictions for accounting in light of the other areas covered. If you’d like some more perspective on changes in the accounting field, check out this piece from Holland Fintech that highlights thoughts from those in the industry.
Take this Future of Finance course on FinTech. In this course, you’ll learn about FinTech trends that are shaping what finance, and by extension, accounting will look like in the future. There are 12 modules for this course.
Opportunities in Accounting
While for many, managerial accounting might be seen as a homogenous career choice, in fact, accounting has a plethora of career paths to consider. While there are certainly a set of fundamental technical requirements, there’s a huge variety of specializations and choices to fit your interests, skills, and career goals.
Starting On Your Path
Whichever path you choose, a college degree is a necessary piece of every accounting professional’s talent stack. While there are associate accounting degrees, you’ll have an easier time finding a job fresh out of school with a bachelor’s degree under your belt, especially if you’re looking beyond entry-level.
One of the first things in your accounting career you’ll want to consider is whether you want to pursue public or private accounting. Here’s an article that goes over the accounting differences to help you make a comparison between the two.
And while there are plenty of opportunities for associates and bachelor’s degree graduates, the farther along your career path you go, you’ll likely want to earn an advanced degree like the MBA in Accounting to move into the higher levels and salaries in the accounting field.
The Big 4
If you think public accounting is the way for you, there’s a good chance you’ll end up at one of the Big 4 firms, at least initially. The Big 4 refers to the four largest public accounting firms, by revenue, in the U.S. The Big 4 are Deloitte, Ernst & Young, PricewaterhouseCoopers, and Klynveld Peat Marwick Goerdeler, better known as KPMG. They offer assurance, legal advisory services, management and tax consulting, market research, budget preparation, and valuation. And many, many university accounting majors end up at one of the Big 4 out of college.
It’s likely that you won’t stay at a Big 4 firm for your whole career. This Big 4 Bound article will give you an idea of the lifespans of accountants at Big 4 firms and thoughts on what you’ll want to consider when it comes to moving on.
If you’re considering taking a turn at a Big 4 firm, check out The Big 4 Accounting Firms podcast. They have years of episodes for you to check out on everything from salaries to what type of clients you’ll work with to how to make partners.
While public and private accounting paths are the two most common options for accountants, there are other directions you can go in. One is nonprofit or government accounting, though it’s less lucrative than the previously discussed options. Nevertheless, if you’re mission-driven, this might be an opportunity to consider.
But there are so many other accounting careers that are off the beaten path, as it were. Here are a few suggestions that might pique your interest.
There’s nothing like first-hand knowledge of a subject. The Where Accountants Go podcast might shed some light on possibilities and career paths you hadn’t thought of yet. In each episode, successful accountants share the stories of their career trajectories. Pick one or two that are particularly of interest and see how they might help inspire your own accounting career path.
If you’re looking for a broad overview of a career in accounting, from specializations to salaries to location, check out this accounting careers guide.
If you’d like to brush up on your fundamentals of accounting or maybe get a jumpstart before beginning a university program, check out Udemy’s online accounting courses. They’re great for all skill levels and cover a huge variety of common accounting topics.
So, what does it look like to intentionally build a solid accounting stack? Let’s take a look.
Pass the CPA Exam
In the United States, to become a CPA or Certified Public Accountant, you must first pass the Uniform Certified Public Accountant Examination, which tests you on auditing and attestation, financial accounting and reporting, regulation, and business environment.
While becoming a CPA can mean more job prospects, it’s not necessary for all accounting jobs. And it is a significant investment in time, money, and energy. Spend serious time considering what your career goals are before jumping into studying for the exam. For example, if you’re set on spending at least some time in the public sector, you’re going to have to go for the CPA.
Each state has different rules regarding eligibility for the CPA exam. Most states require 150 college units, which often ends up adding on an extra year beyond the traditional four-year bachelor’s degree. However, it is common to find five-year combined bachelor/MBA programs. These combined programs mean you’ll earn two degrees and also have the required 150 hours to be eligible if you want to sit for the CPA exam.
If you’re interested in your state’s requirements, you can learn more here. If you scroll down, you can choose your particular state to get the most accurate information.
Get Cozy with Excel
To be an accountant is to know Excel deeply. Not having a firm grasp of Excel as an accountant might be likened to being a skier without skis. While you might not have to work in an Excel spreadsheet daily, you’re going to have to be able to understand and analyze what’s in one, at the very least. You’ll need to know how to sort, filter, apply formulas, and the like. But even better would be understanding more complex tasks like pivot tables, macros, and VLOOKUP.
Here’s a whole playlist dedicated to Excel for accountants if you’re looking to hone your skills. But start with this one covering PivotTables, Power Query, IF, SUMIFS, VLOOKUP, Flash Fill, and Charts. You can work along with the video with the links to the Excel file in the description.
Familiarize Yourself with QuickBooks
Quickbooks is another basic program all accountants should have a solid grasp of. It’s widely used, although there are some new programs out there that are giving QuickBooks a run for their money. QuickBooks has a suite of features, from payroll to invoicing to expense tracking. Especially if you’re working for smaller or even mid-sized organizations, you’ll likely be using QuickBooks.
In this QuickBooks training, you will learn, among other things, how to manage clients and complete basic transactions. If you want to keep going, check out part 2 of the series and learn about things like working with client files, basic QuickBooks features, and how to do essential sales and expenses.
Learn a New Language
Being an accountant with a competitive edge means being able to manage an organization’s data. Having solid data query skills can give you an advantage as an accountant. SQL is one particular data query language you can consider learning. This accounting post provides an insight into why knowing a programming language and being able to code is a valuable asset for an accountant.
You don’t need to go back to school to learn how to code. There are a ton of free and low-cost coding courses on the internet. Want to dive into SQL with both feet? Here’s a (four-hour) introductory SQL tutorial for SQL beginners that covers essential database management topics.
Is a career in Accounting Management for me?
That depends on your skills and interests. Accounting management requires strong analytical, organizational, and communication skills. It also requires a good understanding of accounting principles and practices. If you think you have the skills and interests necessary to succeed in the accounting management field, then it may be a good fit for you.
To Wrap Things Up:
- There are several types of accounting to consider when pursuing your degree. They are financial accounting, managerial accounting, and cost accounting.
- Accounting practices entail detailed and intricate information regarding an organization’s financial accounts and stability.
- These courses will teach you pertinent financial information, including financial analysis, inventory valuation, accounting software, cash flow analysis and cash flows, performance management, margin analysis, key performance indicators, constraint analysis, trend analysis, and other accounting principles. You will learn how to make wise business decisions and handle overhead expenses.
- For accounting students with big business goals, such as obtaining job promotions and higher salaries, you should take advantage of additional educational opportunities to enhance your job marketability. Research the job market today and see what sort of requirements each employer prefers. It’s a smart move!
- These free online courses will help you develop your accounting stack. They are a great tool! We hope it gives you a great accounting foundation to build upon!
Written by: Tammie Cagle
Before you go, see the following:
- Top MBA in Accounting Management Career Paths – Job & Salary Information
- The Cheapest Online MBA in Accounting Management Schools
- The Best MBA in Accounting Management Degree Programs