An Overview of Financial Accounting
Financial accounting professionals are responsible for the public reporting of a company or organization’s financial status. This work involves collecting and maintaining data, detecting trends and forecasting future needs. In addition, financial accountants prepare detailed statements and communicate financial information to company leaders and audiences that do not have an extensive accounting background.
Auditing and managerial accounting are related to financial accounting, but differ in several ways. Auditors usually work with companies to review the reports created by financial accounting offices. Management accountants are primarily focused on providing the accounting services and communication within a company, such as accounts payable, accounts receivable and payroll.
Anyone interested in a financial accounting career will want to gain a solid understanding of several industry standards. The Generally Accepted Accounting Principles (GAAP) are a widely-accepted set of guidelines that assist with reporting procedures. The International Financial Reporting Standards (IFRS) help accountants create consistent and comparable financial statements for businesses across the globe. Skills with multiple types of financial reports are also required, including the ability to create accurate balance sheets, profit and loss statements and cash flow forecasts.
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Financial Accounting Careers
Financial accountants work in a wide range of industries, from corporate to nonprofit, and their responsibilities vary based on the type and size of the organization. Primary duties include preparing financial statements and reports, advising company leaders on investment practices and strategies, communicating a company’s financial status with external audiences, and staying current on the latest economic trends affecting financial decisions. The following career profiles provide examples of financial accounting roles at all levels of employment.
Financial analysts evaluate how bonds and stocks perform and use that information to provide investment advice to businesses and individuals. This position typically reports to a senior accountant or financial manager. Similar job titles include investment analyst, securities analyst, risk analyst and portfolio manager.
Through detailed recordkeeping and data analysis, financial accountants assist organizations with investing and improving overall financial practices. Working as a member of an accounting or financial team within an organization, financial accountants help managers track current trends and forecast future needs. They often report to a senior accountant or financial manager.
Controller positions are found in businesses, nonprofits and government agencies; they usually report to the chief financial officer or other senior executive. The range of a controller’s responsibilities varies widely based on the size of the company and its accounting office. The duties and expectations are similar to those with job titles such as finance manager, director of accounting, financial controller and comptroller.
Financial managers are tasked with coordinating a variety of accounting functions within an organization, most importantly maintaining the general ledger of profits, losses, assets and liabilities. Financial managers often report to finance directors, chief financial officers and other senior executive positions. The responsibilities of accounting managers, financial analysis managers and financial planning managers are similar to those found in financial manager roles.
Frequently Asked Questions About Financial Accounting
How much do financial accountants make?
PayScale reports that financial accountants earn an average annual salary of $55,255. However, earning potential varies based on factors like location, experience, and education.
What are the objectives of financial accounting?
Financial accountants keep track of their organization’s financial operations. Responsible for maintaining financial accountability, they oversee areas like payroll, taxes, and spending. They also provide reports to management and investigate financial discrepancies.
What is the difference between financial analysts and financial accountants?
Financial analysts deal with overall company finances, working to improve profits through investments and financial forecasting.
Financial accountants keep meticulous records, engaging more in a company’s day-to-day financial tasks such as tax filings, financial statement preparation, and budget analysis.
What qualifications do you need for financial accounting?
Employers typically expect financial accountants to hold a bachelor’s degree in accounting or a related field. Some employers prefer applicants with a master’s degree and certified public accountant (CPA) credentials.