Accounting is a vast field and one of the most sought-after career options today. It has everything to do with keeping track of what is happening with a business financially.
The sheer number of jobs available in accounting worldwide is immense - and a lot of them have a high pay grade. So if you are thinking about a good career option to pursue, consider taking a degree in Accounting.
But considering how indispensable bookkeeping and accounting are for many people worldwide, it is wise to be familiar with some accounting terms - no matter which industry you belong to.
Everybody maintains books of accounts, be it an individual household, a small business, a big multinational organization, or an entire nation keeping records of their trade and treasury. And whether you are a professional accountant or not, it is always a sensible idea to have, if not in-depth, some basic knowledge of accounting.
Let's look at how possessing some practical accounting skills may help you in your career:
For Employees and Business Owners
If you run a business or work for someone who does, accounting can vastly benefit your professional life in 5 ways:
1. Deeper Understanding of the Business
Accounting is not merely numbers written in the form of financial statements. It deals with keeping a detailed record of a business's profits and losses, tax payments, recoveries, cash flows, investments, and much more. In a nutshell, a company’s books tell a story about its monetary assets and financial standing.
Therefore, if you know accounting, you will be able to understand where and how the company uses its funds, where it has been making profits, where it has been incurring losses, among other things. You can thus get a clearer picture of the company’s business goals and strategies.
2. From Employee to Ideator
Some employees merely work for money, while others consider the company as their own and take an active part in its growth and progress. Even if you are working as a junior-level associate in a business organization, knowing some standard terms and concepts in accounting can help you to a great extent along your road to success.
If you have a good understanding of accounting, you can study the company's financial statements and come up with productive ideas for its growth. In most organizations, suggesting new ideas and ways to grow can make you a bigger asset to your company. Therefore, you are appreciated within your workplace and would be rewarded for it, too.
3. Creating Ground for Innovation and Automation
Accounting statements can show you how and where the company is unitizing more of its funds. There might be occasions where more than required funds are being spent on things, which can be done more efficiently with minor changes or additions to the current system.
This observation on your part might pave the way for some great innovation in the company’s process, which might help it save a significant amount of money. This money can then be used for something more critical, such as the welfare of employees.
4. Making Better Business Decisions
If you are a business owner, having some knowledge of accounting is extremely advisable. No doubt you can appoint an accountant to take care of your books, but they will only work with numbers and provide you the statements periodically.
However, as a business owner, you can utilize some basic accounting principles to read and analyze those statements and make smarter, out-of-the-box short-term and long-term business decisions. Even if you are just an employee in a company, you can prevent your manager from making poor business decisions by advising them at the right time.
5. Realizing the Company’s Vision
Every business has a vision – where they see themselves in the next five or ten years, what they want to do for society, and so on. With your accounting knowledge, you can help your company achieve its goal.
Looking at the state of finances, you can identify whether the vision is feasible or not. If it is, you can come up with some efficient ways to achieve the same. If not, you can have a discussion with your manager and brainstorm on the same.
Any individual or entity that invests capital in a business with an expectation of earning profit out of it is known as an investor. In today’s competitive corporate world, investors have a huge role to play. Very few businesses can sustain without a good investor.
If you are an investor yourself, it is vital that you know the way business accounting is done. Moreover, you should also know how financial statements are written. With this knowledge, you can not only find out where most of the business's financing is coming from but also estimate its long-term profitability and liquidity status.
Plus, if you can read the company’s balance sheet and profit and loss statements, you can identify any risks involved in investing in the company. No financial statement directly points to an element of risk. You must delve deeper, read between the lines, and refer to the footnotes to gain a deeper understanding of what the numbers mean.
As an investor, if you enroll in an Accounting course and upskill yourself, you will be able to identify the main risk areas that could cause a dip in the company’s asset values. This will, in turn, help you make a wiser decision on whether or not to invest in that company.
Irrespective of your job title or profession, knowing the basics of accounting and finance can positively impact your entire way of looking at things. The more you know, the more you will be able to understand, analyze, and contribute.
Also, becoming more acquainted with accounting concepts will make it easier for an entrepreneur to advance in his career. They can reason with financial analysts, partners, and investors and contribute more efficiently to business growth.
Most importantly, a person with prior accounting knowledge will have a more rational way of looking at a business than a person without it.
Athena Global Education has courses in Accounting like Postgraduate Certificate in Managerial Accounting and Finance and Postgraduate Certificate in Finance for Next Generation Managers.
Scottish Qualifications Authority, UK
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