When it comes to the world of finance and business, accounting is a base of balance and guarantee that things will run smoothly. But what does an accountant do, and what are their responsibilities? Well, accountants are, in essence, the financial backbone of businesses. This information might often pass us by, due to the fact that we don’t get to see them that often, as the accounting process is done behind the scenes.
Having said that, it is important to understand that their work is by no means easy or just ‘playing with numbers’. It’s complex and often requires very distinct skill sets, no matter the job of choice. Because of the vital role their job carries, the compensation accountants get does not disappoint either, mostly falling on the above-average side of the spectrum. It could be anywhere from $30,000 to over $500,000 annually, depending on the title and experience.
What Is an Accountant?
An accountant is a trained professional who records business transactions on behalf of a company or organization, reports on company performance to management, and issues financial statements. So, they are mainly responsible for the process of preparing and examining financial records. Although, when it comes to the job, that is but the tip of the iceberg of their responsibilities. Their duties encompass a considerable portion of financial work.
Accounting jobs, contrary to popular belief, are not just gathering financial information and crunching numbers for clients. And getting an accounting degree does not require someone to be a math genius. It does, however, require a hefty amount of creative problem solving and providing goal-oriented plans.
To become a certified public accountant (CPA), you’ll generally need to acquire a bachelor’s degree in accounting, although pursuing a master’s degree in accounting can provide further specialization and career advancement opportunities. However, depending on what range of work you’re interested in, there are other routes and degrees in accounting you can pursue, such as an associate’s degree in accounting.
Daily Duties of an Accountant
It is generally understood that they take care of the financials, but what does an account do on a daily basis?
Well, that depends on what kind of job they have. Not only that, but an accountant’s daily tasks may change from day to day. An accountant’s main responsibilities typically include preparing and examining financial records and ensuring information is up to date and accurate. But an account can specialize in areas such as forensic accounting or taxation or focus on more specific areas of a company’s financial department. However, there is one vital part of their job description, which is a legal obligation to perform all their work honestly.
Although their responsibilities are versatile, these are their most common accounting tasks:
- Recording and categorizing expenses, and preparing financial reports
- Analyzing financial data so they can recommend ways to help the organization run proficiently
- Conducting a risk analysis evaluation
- Taking care of tax returns and making sure they’re paid in time
- Examining the accuracy of financial documents and where they stand with laws and regulations
- Offering advice to organizations on how to reduce cost, improve their revenue, and boost profit
- Finding and addressing any discrepancy in accounting
- Keeping account books and systems up to date.
- Working with external auditors
- Recording payments and disbursements
Key Soft Skills to Succeed in Accounting
Being good with money matters is the number one criterion for getting into accounting in the first place. Along with that, there are other ways to excel in your work and differ from the crowd. Although the traditional skillset is a must-have and provides a resume that will most likely result in an interview, the personality traits and ability to express them will land the job.
While the technical side deals with accuracy directly, soft skills have a more indirect route to implementation in the job. They are almost ‘personal’ qualities that most hiring managers will look for in their potential workers. In today’s evolving world and by extension—evolving career paths, it’s only natural to expect an accountant to keep up with the technology and have some general knowledge about business, which is just the basics of soft skills.
Maintaining integrity in accounting is an ethics question, which can be answered with objectivity on the job and a lack of questionable business relationships. This means being honest, not offering problematic solutions to clients, and keeping the client’s privacy intact
Keeping up the integrity is crucial to the accountant’s credibility, which in turn, has a great say in their employability. Credibility is one of the very basic attributes that an accountant should have to even have a shot at success in the job market. Because it guarantees that they will do their best for the client.
Business knowledge comes in handy when trying to understand and clarify an accountant’s own role within the company and the company’s role in the market. It is easier to work with someone whose background you’re familiar with.
As such, this knowledge helps with the efficiency of the job. Helping an accountant understand the business dynamics, staff skills, and capabilities, in turn, makes the analysis and problem-solving much easier tasks.
Leadership skills are widely appreciated in the work industry, regardless of the job description. These skills include traits that are not usually natural to a lot of people. When it comes to accountants, this asset becomes important exactly because of the characteristics it carries.
Being approachable and available to people they’re in business with, being a visionary, having confidence and patience, are just a few of the things that make these skills valued in accounting. Not only because of their day-to-day usage, but they also serve as an indicator that the person has the abilities that would fit well in any senior position.
Read more about leadership skills to have in the workplace.
Up-to-date technology expertise
Having technology skills can help an accountant not only perform the job more smoothly but give them an advantage in the job market. Besides the obvious use of financial software programs, there are many other technical skills that would look good on an accountant’s skillset. Knowledge of Excel, business intelligence software, Microsoft Visual Basic, and QuickBooks, just to name a few.
Technology skills aren’t just a great look for the CV, they actually make the accounting job much easier. Being able to implement new technology assets into the work, will take care of a portion of the job for them. Thus, the time-consuming part of the job will be done, and the accountant can use their time on reaching the final goals.
Knowing how to communicate well is key to an accounting job because of the weight it holds in getting the information across in a manner that is easily understood by the other party. It can also help with landing a job in the first place, as it is a vital part of first impressions.
Whether the communication is happening in writing, via phone, or in-person – the clearer someone presents the message they’re trying to convey, the better chance it has to perform well. This can be the case with job interviews, idea pitching, and generally creating a good relationship with coworkers.
Commercial awareness means knowing the fit of your business in the market. This implies knowing what kind of impact could a form of a political, economic, and social movement have on it. Having this skill fits perfectly in an accounting job because one of their main responsibilities is risk analysis — and you can’t analyze risks if you can’t identify them.
Not only that, but commercial awareness can go a long way in a job interview, as it shows the company’s dedication and interest. Furthermore, it can be used as a skill in developing new ideas, spotting opportunities, and having a better understanding of what it is that’s being done for the company by the employee.
Being analytical is one of the fundamentals of being an accountant. Every prospective accountant should work on perfecting it because it is the very essence of their job. With well-developed analytical skills, a person would be able to recognize and resolve problems quickly.
Having analytical skills translates into having the ability to collect information and analyze it, make decisions, and have a knack for problem-solving. All of this would, for the most part, involve a lot of critical thinking and strategizing solutions, which are the end product of an accounting job.
Key Technical Accounting Skills
Soft skills may be of help in overall job performance, but without the technical side of it, doing or even getting the job would prove impossible. This is not to say one is necessarily more important than the other, they often go hand-in-hand.
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According to a survey conducted by Robert Half, 54% of CFO-s claimed to value soft skills and hard skills equally, while 36% of them said they put greater importance on technical skills. Although, the technical skills have better performance if they are done by a person with a great set of soft skills.
These skills are not just something you learn in school and implement in your work. Just as soft skills need maintenance and care, technical skills need constant sharpening and an eagerness to learn the newest tricks. Staying informed, continually improving, and critical thinking are the key components of mastering accounting.
Creating Financial Statements
Financial statements are there to give insight into the business’s financial state at a given time over a specific period of time. This can help with the overall understanding of the business’s position. To create a new financial statement, information from the old one will be used.
A financial statement of a company can be created at any given point for a selected period of time. Every company has a different accounting cycle, some even do it monthly. However, they must be ready by the end of the tax year.
What these statements include are:
- The income statement
- The statement of retained earnings
- The balance sheet
- The statement of cash flows
Reconciling Account Balances
This is an accounting process that is used to make sure that transactions leading to the ending balance are correct. In essence, it confirms that the sum that leaves the account complements the amount that is spent, thereby, these two accounts are balanced at the end of the report date.
Reconciling is used by accountants to make sure there is no financial misappropriation or theft happening. These two balances should have no discrepancies, and if they do, it should be explained in the reconciliation statement.
There are two main ways of reconciling an account:
- Documentation review
- Analytics review
Journalizing Financial Transactions
Journalizing in accounting refers to the process of recording all the business transactions that happen. This means keeping a chronological journal of them. This journal would include the date, the account, and a short description of said transaction.
There are seven most common types of journals in accounting: sales journal, purchase journal, cash receipts journal, purchase return journal, disbursement journal, sales return journal, and general journal. There’s also the option of single-entry and double-entry accounting.
The three steps of journalizing are:
- Examining each business transaction
- Establishing which accounts will be affected
- Formulating the journal entry
How To Become an Accountant
To become an accountant, dedication and hard work are crucial. The process involves obtaining a bachelor’s degree in accounting, distinct from finance, with a minimum of 120 credit hours or 60 if you hold an associate’s degree.
Yet, the journey doesn’t stop at academics alone. It extends to the acquisition of crucial certifications that underscore your expertise. The titles of Certified Public Accountant (CPA), Certified Financial Analyst (CFA), or Certified Fraud Examiner (CFE) stand as testaments to your mastery and proficiency.
In addition, infusing practical experience into this voyage assumes paramount importance, and this is where internships come into play. These real-world skills are a gateway into accounting roles, making your entry smoother and more assured.
How much we understand the weight accountants carry in the world of finance and business is directly linked to how well we understand what they do. Their daily duties require, not only academic knowledge but good sets of soft and technical skills. And while most employers will take into account both types of abilities, some would prefer one over the other.
We’ve cleared up everything that makes an accountant great at their job—business knowledge, leadership skills, commercial awareness, and their basic day-to-day duties that include creating financial statements and journaling. There’s a lot to master and a lot to enjoy in the progressing accountancy world.
Frequently Asked Questions (FAQ):
What qualifications does one need to become an accountant?
To become an accountant, you typically need a bachelor’s degree in accounting, finance, or a related field. Some positions may require a master’s degree in accounting or a related discipline. Additionally, obtaining professional certifications like Certified Public Accountant (CPA) or Chartered Accountant (CA) can significantly enhance your credentials and career prospects.
Are there different types of accountants?
Yes, there are various types of accountants specializing in other areas. Some common types include:
- Public Accountants: Offer services like auditing, tax preparation, and consulting for individuals, businesses, and organizations.
- Management Accountants: Focus on internal financial reporting, budgeting, and performance analysis within a company.
- Government Accountants: Work in public sector organizations, ensuring compliance with financial regulations and managing public funds.
- Forensic Accountants: Investigate financial discrepancies and potential fraud.
- Tax Accountants: Specialize in tax planning and preparation for individuals and businesses.
Are accountants and bookkeepers the same thing?
No, accountants and bookkeepers are not the same. Bookkeepers handle day-to-day financial transactions, recording them in ledgers and maintaining financial records. On the other hand, accountants analyze financial data, provide insights, and help make strategic financial decisions based on the information gathered.
Do all accountants deal with taxes?
Not all accountants exclusively deal with taxes, but many do. Tax accountants specialize in tax planning, preparation, and compliance for individuals and businesses. Other accountants also deal with tax-related matters to varying degrees, depending on their role.
Do accountants need to be good at math?
Yes, accountants need to have a solid foundation in math, as their work involves complex calculations, data analysis, and financial modeling. However, the level of mathematical complexity required can vary depending on the specific role and the tasks involved.
Is accounting difficult?
Accounting can be challenging, particularly as you move into more advanced concepts and responsibilities. It requires attention to detail, analytical skills, and a strong understanding of financial principles and regulations. The difficulty can vary from person to person based on their aptitude for the subject matter.
Is accounting harder than finance?
Both accounting and finance have complexities, and the difficulty level can depend on individual strengths and interests. Accounting often deals with accurately recording and reporting financial data, while finance focuses on broader financial analysis, investments, and strategic decision-making.
What is the hardest subject in accounting?
Many individuals find subjects like advanced financial accounting, taxation, and auditing to be more challenging areas within the field. These subjects often involve complex regulations, intricate calculations, and a deep understanding of financial reporting standards. However, the perception of difficulty can vary from person to person.