You might be wondering, “What is an accounting degree?” It’s much more than just math. Accounting is a vast field that includes not only recording financial transactions but also sorting, storing, analyzing, and reporting on various types of data. Accounting professionals need the knowledge and skills to handle these tasks.
What Is an Accounting Degree Program Designed to Demonstrate?
One of the most familiar facets of accounting programs is learning how to balance budgets — recording items on a balance sheet and ensuring the numbers match periodic financial statements — for presentation to third parties, such as the Internal Revenue Service (IRS). These statements must be prepared and reported using generally accepted accounting principles, also known as GAAP. Although balancing budgets is a very basic financial accounting duty, it is also at the root of most concepts and techniques an accounting student will learn about.
Another responsibility accountants take on is providing a company’s management team with information that helps keep the business solvent and healthy. These reports are kept within the company for use in budgeting and financial forecasting. This area of accounting is called management accounting. Accurate and professional accounting is what keeps businesses running smoothly, within government regulations, and with a healthy profit margin. Understanding the ways professionals with an accounting degree can help, explains why accountants are integral to a company or organization’s success.
How to Help Businesses Make Optimal Investment Decisions?
A company’s future growth is heavily dependent on its financial stability and where its management decides to invest. Accountants compile and report on finances for publicly traded companies according to Financial Accounting Standard Board guidelines and help those organizations decide where to invest for optimum financial success. To this end, accounting degree programs prioritize teaching accounting professionals how to help investors understand an entity’s financial history and project the future outcomes of potential investments using detailed data reports.
How to Help Businesses Qualify for Loans
While entrepreneurs may be skilled at running a business, accounting professionals understand what information lenders need to determine a company’s eligibility for a loan. Financial institutions and lenders require extensive information before determining whether to loan a business money, so the content of these statements often influences creditors’ decisions regarding a company’s loan eligibility.
To maximize their ability to help their employer qualify for necessary funding, accounting coursework provides students with extensive knowledge of the most prominent techniques used to record and report financial data. This allows them to offer lenders an accurate perspective of the company’s debt to income ratio and operating margins (the profit a company makes as a percentage of its overall sales). With this data in hand, lenders can build a realistic image of the company’s financial stability and rate of growth.
An Accounting Degree Teaches Best Practices For Compliance with Corporate Governance Rules
Proper accounting aids a company in complying with the corporate governance rules that businesses use to direct their decisions and justify their actions or investments. In this regard, an accountant’s core responsibility is to track a company’s financial performance and outlook. Thereby helping the management team determine how the company should comply with its governance policies, particularly during project planning.
Almost all corporate governance decisions are based on accounting outcomes. Proper accounting helps companies manage assets, choose projects and investments, and understand how much money they have and where it comes from. It also guides hiring practices, equipment acquisition, and the decision to incur more debt when the time is right.
This effectively means that corporations base many decisions about operations, expansion, and investments based on accounting data. Therefore, accounting coursework must be designed to ensure that their graduates understand how to properly discover, analyze, and package such data. This is especially important for publicly traded corporations, as they must regularly disclose an accurate and honest report of their financial status and practices. Yet even in companies that are not publicly traded, making an accurate balance sheet available to investors or shareholders reassures them that the company is properly investing their capital.
With an accounting degree under their belt, professionals earn the technical skills and industry knowledge necessary to help ensure that their reporting will not mislead investors.
How to Facilitate Honest Communication of Finances Among Stakeholders
Accounting is a highly regulated industry and accounting degree programs play a significant role in helping accounting professionals learn how to correctly navigate those regulations. For example, an accounting student will usually be taught how to use generally accepted accounting principles (GAAP) — the standard language businesses use to communicate balance sheets, income statements, and financial notes and disclosure — to effectively communicate financial data and budgets to both internal and external stakeholders.
GAAP explains which items should be recognized and explained in financial statements; what amounts need to be included; the line items, subtotals, and totals required on financial statements; and which disclosures need to be made. Accountants need the knowledge and skills to adhere to these standards and include all required information in their reports. While these skills can be picked up gradually in the field, an accounting degree program should give students the opportunity to learn about them and practice applying them in an academic setting. So by the time they enter the workforce, they understand how to consistently provide management, investors, and lenders with relevant, reliable information that can be used to make critical financial decisions.
The decisions made based on an accountant’s data analysis and reporting can make or break a company’s future. Therefore, proper and careful accounting is foundational to an organization’s success and planning. By teaching students how to apply GAAP, gather and analyze pertinent data, and report significant findings in an understandable way, a Bachelor’s in Accounting degree program offers students an opportunity to provide highly valuable accounting services to their respective employers. Learn more about Maryville University’s online Bachelor of Science in Accounting program.
Now that you know exactly what an accounting degree has to offer, take a closer look at the potential accounting career paths here.