If you know what accounting is – the preparation of financial reports and documents – then you might wonder what distinguishes the subject of financial accounting from accounting in general. Financial accounting is a specialized field of accounting as well as an academic concentration sometimes offered at both the undergraduate and graduate level of study. The principles and skills you learn from studying financial accounting can help you attain a wide variety of jobs. Two of the specialties of accounting that employ the most graduates of financial accounting degree programs include public accounting and managerial accounting.
Studying Financial Accounting
Financial accounting refers to the field within accounting that relates to tracking a business’s financial transactions. These transactions Every accounting student will take some coursework in financial accounting. In fact, while many bachelor’s degree programs in accounting require students to take one class in cost and management accounting, one class in corporate accounting and one class in auditing, it’s common for an undergraduate accounting curriculum to include two to three courses in financial accounting at increasing levels of difficulty. Coursework in financial accounting is usually a prerequisite for master’s degree programs in accounting, as well, according to U.S. News & World Report.
Some college degree programs at the undergraduate or graduate level offer students the option to specialize in financial accounting. In a bachelor’s degree program in accounting, financial accounting may be one of several sequences or concentrations students can choose within the major. Coursework in a bachelor’s in financial accounting program might include financial accounting, managerial accounting, cost and management accounting, intermediate accounting, business finance, advanced financial accounting, advanced auditing, advanced tax, accounting for nonprofit entities, international accounting and forensic analytics. In financial accounting programs, as in accounting programs in other concentrations, completing a professional practice internship with an accounting or business firm can offer valuable experience, according to the United States Bureau of Labor Statistics (BLS).
A Master of Accountancy in Financial Accounting or similar degree program might be geared toward students who are working toward their Certified Public Accountant (CPA) license or Certified Management Accountant (CMA) professional credential. Such a program might include courses that focus on the skills needed to excel in financial accounting tasks, such as decoding of corporate financial communications, strategic cost analysis for financial management and audit analytics. However, to make sure these students are prepared to take their credentialing exams, the program might also include studies in more general business and accounting topics, such as ethics in business, advanced auditing and accounting information systems.
An undergraduate degree that includes a concentration or sequence in financial accounting should also be broad enough to help students meet the minimum formal accounting content requirements needed to become a CPA.
Jobs in Public Accounting
Public accounting refers to the preparation of financial documents that individuals and organizations are legally required to release. The field of public accountant is broad, with responsibilities that range from tax return preparation to conducting audits and advising senior-level management in a business consultant role. Within the field of public accounting, you may choose to specialize in a type of accounting work such as taxation or forensic accounting, the BLS reported.
In particular, earning your degree in financial accounting can help you become a CPA. This is in part because the curriculum of an undergraduate financial accounting program is broad enough to provide students with a solid background in all of the subjects of study needed to sit for the CPA exam. However, another way earning your financial accounting degree can help you become a CPA is by allowing you to close the gap between the number of semester hours needed to earn your bachelor’s degree and the number of semester hours needed to become a CPA. A graduate program in financial accounting can often be completed in just one year and will provide the additional 30 semester hours aspiring CPAs need to meet the minimum education requirement for CPA licensure.
Becoming a CPA can really pay off, with a salary boost of 10 to 15 percent compared to your peers without the credential, according to the Association of International Certified Public Accountants (AICPA).
Managerial Accounting Roles
The other career path that employs many students with a strong background in financial accounting is managerial accounting. A managerial accountant – also called a private accountant, cost accountant, corporate accountant, management accountant or industrial accountant – prepares financial reports for a company’s internal use. Managers and executives within the company rely on a managerial accountant’s work to help them set budgets, evaluate the organization’s financial performance, plan for the cost of expenses and even make investment decisions, according to the BLS.
Private accountants can also benefit from attaining CPA licensure, though the impact of having the credential may be smaller in this field than in public accounting.
Distinguishing Between Accounting and Finance
One factor students should keep in mind when considering a financial accounting degree program is that financial accounting is a distinct subject from finance. Because the programs of study seem so similar, students aren’t always sure what the difference between accounting and finance is . Generally, these two degree programs focus on two different aspects of business: the principles and processes of financial reporting and the analysis and interpretation of that financial data to make financial decisions, respectively. They also prepare students for different, though related, career paths that require distinct sets of skills.
If you really want to study both accounting and finance, you could always choose to dual major in accounting and finance. A double major is hard work but offers the advantage of having the best of both majors.