Do you find it difficult to understand the basics of accounting? If yes, then this is the right place for you. In this article, we will discuss the basics of accounting in a simplistic way so that it will no longer be a complicated subject but merely a systematic approach to learning. Indeed, there are a lot of reasons to love being an accountant. It’s one of the biggest and most competitive career fields with ample opportunity for growth. This is because accountants are relied on in numerous sectors, including government, business, and also non-profits. But behind every dollar earned or saved is a skilled professional who ensures accurate bookkeeping and accounting. Accountants can help you understand what your financial picture looks like, and also advise you on how to make improvements and plan for the future. So, lets get ready to learn the path to become a successful Business Accountant.
Basics about Accounting
The science of accounting involves the identification, measurement and communication of economic information that represents how a company’s resources are used in producing the goods and services they sell. In an organizational context, accounting provides information to various stakeholders such as management, employees, investors, tax authorities and others which helps them make decisions about the organization’s operations as it enables them to estimate the future impacts of decisions on their resources.
Accounting is a highly important part of management studies for the management students. Students find it very difficult to understand this course due to its extensive study. In short, the management accounting aims at providing a framework for implementing and processing accounting data than merely summarizing them.
No matter how small or big a company or business, accounting management is the key to get to the next level. You may also know that almost all large companies employ a lot of accounting talents. Instead, some of them are doing business with an independent auditing firm. Moreover, it’s a statistical fact that small businesses generate over 65% of all new jobs. Besides, accounting contributes towards 3.8% of the US GDP and any business with less than 1000 employees will always require an accountant on a part-time basis.
Knowledge Required to become a Certified Business Accountant
Accounting is an immense subject, but the basics are what you need to understand. A thorough understanding of the basics will help you easily comprehend the more intricate elements of accounting. When you apply for a job as an accountant, you are required to possess information about these basic accounting concepts.
Understanding the Basics of Accounting
The basic of accounting starts from recording all the financial transactions of a company or any individual via the cash method, simple journalizing system, and traverse system. Also, the limitations in recording financial transactions have led to the development of various accounting systems.
The concept of debit and credit is the basic fundamental concept in accounting. The debits and credits are on opposite sides of ledger entries. On one side of the account is the debit side. On the other side of an account is the credit side. It could also be referred to as left-side entry and right-side entry. These terms help to keep a balance in all accounts involved in the transaction.
The basic of the accounting equation is the relationship between assets, debts, and the capital owned by the company. This accounting equation has a simple form of “Assets – Liabilities = Owner’s Capital”. Also, it can be expressed as “Assets + Owner’s (Capital) – Liabilities = 0”.
It is one of the initial principles and concepts that you have to understand. The basic information that you need to know about the accounting equation is what it means, how to calculate it, and what are its objectives. With this knowledge, you will be able to understand all the fundamental concepts in accounting.
Understanding the Accounting Cycle
The cycle of accounting involves a systematic process of financial reporting. Saying so, this cycle is the steps you need to follow to produce the financial statements that are acceptable and accountable. The word “Accounting Cycle” was created by Karl Kapp, German Economist. Kapp gave a definition of the accounting cycle in his book entitled “Principles of Government Finance” in 1934.
Accounting Cycle is the cycle of record-keeping in a company to produce financial statements that can be accountable for. The process involves posting, verifying, and adjusting accounting transactions. In most instances, the process takes an entire year to complete from beginning to end.
A successful accounting cycle starts with a good understanding of the accounting cycle for beginners. The simplest way to explain the accounting cycle for beginners is by breaking it down into three major steps. These include –
- Recording and Classification
- The Preparation of Financial Statement Summary
- The Preparation and the Presentation of Financial Statements
In the beginning, it may take two to three weeks for you to get an understanding of the basic accounting cycle. After that time, you can finish most of the accounting processes independently without spending too much time to finish them.
Important concepts in Accounting for Beginners
Below-mentioned are the learning steps to master accounting for beginners –
- Firstly, Accounting Learning Preparation
- Secondly, General Journal
- Thirdly, General Ledger
- Then, trial balance
- Further, Adjusting Entries
- Updating the Ledger
- Income Statement
- Closing Entries
- Also, Updating the Ledger (again)
- Capital Statement
- Lastly, Balance Sheet
Market Demand and Job Opportunities
According to the Bureau of Labor Statistics, employment for accountants is expected to grow 4% from 2019 to 2029, as fast as the average for all occupations. Accountants with professional certifications like the CPA designation are expected to have the best job prospects.
If you are a student, accountant intern, or young professional looking for accounting job opportunities, different companies hire with different strategies. Some companies have open interviews all year long. So, you can apply for jobs at your convenience. Other firms will only be hiring for specific temporary jobs such as tax season or year-end audit help. Accountant jobs usually require an associate’s degree in accounting. However, many new accountants begin their careers with a bachelor’s degree in accounting or another field.
Job Opportunities in Accounting
Job opportunities in accounting are available in a wide variety of fields. Businesses or non-profit organizations, both can employ Accountants. Their work is essential to the stability of both for-profit and non-profit businesses. Moreover, general accountants provide overall financial guidance to company stakeholders.
A controller (also known as an accounting manager) supports a company’s accounting staff by directing financial reporting functions and ensuring the accuracy of the organization’s bookkeeping. Further, a controller may also develop internal policies and procedures for the administration of an organization’s budget, cash management, and accounting functions. A controller usually reports to the CFO or CEO.
Average Salary: $201,894 10-Year Projected Growth: 16%
Banks and financial institutions, insurance companies, consulting firms, Finance departments of governments and not-for-profit organizations are the top employers for Financial Managers. Further, they are included in the management team or board of directors of public corporations. Moreover, some financial managers specialize in working with the debt or equity markets on behalf of their client organization.
Average Salary: $129,890 10-Year Projected Growth: 15%
Management consultants perform a range of services to assist companies in improving operations. They work for businesses, nonprofit organizations and government agencies alike, analyzing business structures and making suggestions for improvement. Moreover, depending on the needs of the client, a consultant might focus on information technology, infrastructure or human resources.
Average Salary: $101,988 10-Year Projected Growth: 14%
A financial analyst studies an organization’s balance sheets, income statements and other financial records to determine its performance. They forecast the company’s performance for investors and make recommendations on how the company should invest or allocate its finances. Also, Financial analysts may specialize in industries such as retail, banking, insurance or media.
Average Salary: $81,590 10-Year Projected Growth: 5%
Now that we have all the required details lets jump into the preparation guide to become a Certified Business Accountant Now!
Preparation Resources to become a Certified Business Accountant
Many people still find it challenging to master accounting because many things and points about accounting must be memorized and applied as if accounting is a dizzying science. Moreover, accounting can be confusing when you’re starting out. Now, as long as you know the basic keys of accounting, there is no need to feel confused by this subject. To make learning easy for you, here we are going to list the essential resources to help you understand the basics of accounting.
Certification: Certified Business Accountant
Certified Business Accountant – Business accounting can be a rewarding career for those who are interested in the business side of things. A career in business accounting involves managing the accounting responsibilities in a business. In many cases, this is an entry-level position for which candidates are expected to undergo training. Business accounting is unique due to the various exposure you will get which will be helpful when you move out of this field. It is a fact that companies in India are increasingly relying on business accountants for their various accounting requirements. Whether it is an individual entrepreneur or a large manufacturing company, they all need business accountants for solving and managing accounting and business issues.
The Certified Business Accountant tutorial is a tool that can help improve your grade and success in training. Although many candidates are late to take tutorials, you should not overlook the benefits of a tutorial — it’s one tool helping you effectively prepare for exams. Vskill’s tutorial allows you to get all the information in one place and help you prepare for your exam in a comprehensive way. It will surely prove to be a valuable tool for anyone interested in boosting their skills in accounting, from professional development to personal enrichment.
Practice tests let you practice answering questions in the same format as the test you’ll be taking. This is very important when it comes to saving time. Time on tests usually isn’t a concern until you get to the last couple of sections, but with practice tests, it’s important for the first few sections too so that you can read through all of them and answer all of the questions without running out of time. Practice tests are excellent tools for checking your progress in the review. It is the easiest way to find out which topics you have mastered and on which ones you need more practice. Test yourself with a free practice test today!
A degree in finance or accounting can have a huge impact on your future career. With a degree, you’ll gain more than just the knowledge needed to do your job, but you’ll also get opportunities that you didn’t think could be possible. Through studying and working in the field, you can not only learn new skills and techniques that will help you at work but also in business as a whole. If you’re deciding whether or not to pursue an education in finance or accounting, here are some of the best reasons our experts say that a degree is a way to go.