Anyone interested in numbers or who has taken accounting courses may wonder how to become an accountant.  A love of working with numbers and good analytical skills are just the tip of the iceberg when it comes to a career in accounting.

Reasons to Become an Accountant

Because every business needs some sort of accounting duties performed, accountant jobs are almost always in high demand. The skilled accountant is rarely unemployed.  Accountants have a certain amount of job security that many other careers don’t.  There are many choices of employment for the accountant, including forming a new accounting firm.

Duties of an Accountant

The duties of an accountant can vary widely, depending on the size and type of business and the specific job title, but accountant duties often include:

  • Classifying and recording the financial data of a business using journals and ledgers, usually prepared with an accounting software program, occasionally done by hand
  • Analyzing a company’s financial data
  • Keeping accurate financial records of a business
  • Reviewing and processing expense vouchers and invoices
  • Reconciling bank transaction records
  • Assisting with the company’s budget
  • Maintaining payroll data and processing payroll
  • Preparing tax returns
  • Preparing, statistical data, reports of operations,, financial statements, expense reports and other requested reports

Knowledge that Accountants Should Possess

Accountants perform many duties, including record keeping, analyzing financial statements, budgeting, preparing tax returns, payroll duties, and much more.  To increase your chances of landing a job as an accountant, it’s important to have knowledge in the following areas:

  • Accounting principles and standards
  • Cash vs. accrual accounting
  • Debits
  • Credits
  • Payroll
  • Expense accounts
  • Profit and Loss statements
  • Balance sheets
  • Taxes
  • Asset accounts
  • Liability accounts
  • Income accounts
  • Budgeting
  • Computer skills

Recommended Education for Accountants

Most accountants have a 2-year or 4-year college degree in accounting, business or some type of financial degree, but very often a degree is not necessary for an entry-level accounting job. Certain types of accountants, such as CPAs, are required to take specific courses and pass an exam in order to obtain a license from the state.

These positions are, of course, higher paid than many of the other accounting positions.  CPAs are often employed as tax accountants.  If you are interested in how to become an accountant for a general accounting position, a couple of college level courses in accounting are sometimes the only requirements. The following courses, however, will provide a good solid foundation for an accountant position.

  • Introduction to Accounting
  • Financial accounting
  • Business writing
  • Economics
  • Managerial accounting
  • Microsoft Excel
  • Accounting software

As stated earlier, accounting is a good field to go into because the jobs are numerous and the unemployment rate for accountants is very low.  Every kind of business needs some form of accountant, to do bookkeeping, payroll, taxes, audits, reconciliation, financial reports, statistical data and much more. You can even start your own business. With the information in this article, you now know how to become an accountant.


The field of accounting is wide and the term accounting covers many different types, such as fund, accrual, cost and payroll.  To understand the differences, read on.

Fund Accounting

Fund accounting covers the area of accounting that is used by government and non-profit agencies.  The accounting focuses on collection of funds, i.e., where money was earned, rather than where the money was spent.

This is quite different than accounting for a corporation, where the focus is on where money is spent, as well as earned.  Fund accounting focuses on the operating expenses as well as the specific funds, each having their own purpose.  In fund accounting, the emphasis is not on profits, but rather on accountability.

Fund accounting can also apply to portfolio accounting or investment or securities accounting.

Accrual Accounting

The accrual basis of accounting is accounting where a business recognizes revenue in the period in which it is earned, and deducts the expenses when they are incurred. In other words, the revenues are recorded when they are earned and the expenses are deducted when they happen. Revenue is considered earned when a product is sold or a service is provided, regardless of when the cash is actually received.

If cash is not received immediately, then a receivable account is set up. Expenses are recorded when services are provided or assets are used, regardless of when the cash is paid out. If cash isn’t paid when the service is received, a payable account is then set up to record the expense. Accrual accounting gives a realistic picture because it stresses the matching of offsetting of revenues and their related expenses.

Accrual accounting is the most commonly used form of accounting for businesses, and is the best method of measuring the income accurately for a business.

Cost Accounting

Cost accounting is s system used to provide detailed information about the cost of producing a specific product. The product cost information is needed for several reasons:

  • To help determine the selling price of a product
  • To assist in controlling production related costs
  • To determine a net income or net loss

Standard costs are established during budgeting, but standard costs should be reviewed from time to time and revised should major changes occur in production methods or the prices that are paid for materials, labor or overhead. If the actual costs exceed standard costs because of waste, the standard costs should not be revised.

If, for example, supplies are spoiled due to employee negligence, cost should not be revised. But if the cost of materials goes up, then the standard cost should be revised to reflect the increase.

Differences between the standard costs and the actual costs are termed cost variances.  Cost variances regarding labor, factory overhead and cost of materials can result from a wide number of reasons and should be carefully analyzed.

A cost variance is unfavorable if the actual costs exceed the standard costs. If standard costs exceed actual costs, the cost variance is referred to as favorable.


In today’s volatile job market, you may be asking yourself is accounting a good career.  Well, in a word, yes!  Accounting is a fantastic career.

Despite the economy, accounting jobs are on the rise.  Not only is accounting a solid career choice, many accounting jobs pay very well, and there’s always room for advancement in the field of accounting.

For the accountant, there are many career choices. Even before finishing your degree, you can land a job as an accounting clerk and gain some experience in the field.

Accounting is a white collar occupation, with regular business hours and comfortable conditions of working indoors.  Working conditions are quite favorable and there are always opportunities for advancement in the field of accounting.

One may begin as an accounting clerk or a junior auditor at a large corporation.  Gaining both knowledge and experience in the field, it’s fairly easy to move up the corporate ladder in the field of accounting.

Accountants work for small businesses, large corporations, auditing firms, the Big Four Accounting firms, government offices, including the Internal Revenue Service, and, there are many accountants  that are self -employed.  The opportunities are endless for one with a degree in accounting!

Some popular accounting positions include:

  • Accounting clerk – receivables or payables
  • Bookkeeper
  • Junior auditor
  • Senior auditor
  • External Auditor
  • Internal Auditor
  • CPA
  • Payroll
  • Forensic accountant
  • Tax Accountant
  • Controller

Accountants may work full or part-time, and many accountants are able to work as telecommuters, i.e., work from home. Many accountants work from home for large corporations or small companies, and others run their own accounting business from their home. Some accountants work as tax preparers for popular tax firms or work on their own as professional tax preparers.

The accountant career has many job choices and therefore can be flexible, allowing the worker to work part time or full time, work in the office or at home, or even open their own business. If you enjoy flexibility, accounting may be the career for you.

Accounting, however, does require a lot of knowledge as well as discipline. The accountant must follow the GAAP, generally accepted accounting principles, and often works long hours, especially during the tax season.

Deadlines must be met and information must be accurate. Those just starting in the accounting field may find themselves working long hours, including weekends, to meet crucial deadlines.

The accountant must have a good understanding of math, strong analytical skills, and a great sense of concentration and focus.    Work can be monotonous at times, and hours can be long during peak periods. Vacations may need to be postponed in order to meet deadlines, such as budgets and tax returns.

The accountant may spend many long hours sitting in their office, crunching numbers, and therefore, accounting may not be the best career choice for those that are truly outgoing or those who are the entrepreneurial type, as accountants are required to follow a strict set of rules, rather than “do their own thing”.

A bachelor’s degree in Accounting is required for most accounting positions, except for perhaps clerk and bookkeeper positions. To make the most money and advance the furthest in the field of accounting, taking and passing the rigorous CPA exam is a must.
Those who master this feat can go on to earn a fantastic salary and work practically anywhere they choose.


The Big Four accounting firms are not single firms, but actually accounting networks, each having an entity to coordinate network activities. The Big Four are the largest professional networks in accounting and are responsible for handling audits for a majority of private, as well as publicly traded companies.

The Big Four accounting firms are:

  • Ernst & Young
  • KPMG
  • Deloitte Touché Tohmatsu
  • PwC (Pricewaterhouse Coopers)

The coordinating entity for the Big Four firm KPMG is a Swiss company, and for the other three Big Four accounting firms, the coordinating entity is UK based. The entities do not practice accounting but are similar to law firm networks.

KPMG, in 2007, merged four firms in Germany, Switzerland, Liechtenstein and the UK to form a single firm.

Ernst & Young includes separate legal entities consisting of EMEIA (Europe, Middle East, India, Africa), Asia-Pacific and Americas. These firms do not hold ownership in local entities or perform services but coordinate the services of local firms within their areas.

Number of Employees

The Big Four firms’ employee count in 2011 was as follows:

  • PricewaterhouseCoopers   –  169,000
  • Ernst & Young   –  152,000
  • KPMG  –  140,000
  • Deloitte Touché Tohmatsu   –  182,000

Total Employees  –   643,000


Big Four revenues for Fiscal year 2011:

  • Pricewaterhouse Coopers  –  $29.2 bn
  • Ernst & Young  –  $22.9 bn
  • KPMG  –  $22.7 bn
  • Deloitte Touché Tohmatsu  –  $28.8 bn

Total Revenue 103.6 bn


Big Four firms headquarters are located in:

  • Deloitte Touché Tohmatsu  –  United States
  • Ernst & Young  –  United Kingdom
  • Pricewaterhouse Coopers  –  United Kingdom
  • KPMG  –  Netherlands

Big 8

Originally, the Big 4 was the Big 8. The Big 8 originated in the late 19th and early 20th centuries, when alliances formed between United States and British accounting firms.

The Big 8 consisted of:

  • Arthur Young and Co.
  • Arthur Anderson
  • Coopers & Lybrand
  • Deloitte Haskins and Sells
  • Peat Marwick Mitchell
  • Ernst & Whinney
  • Price Waterhouse
  • Touche Ross

Due to several mergers, and a scandal which involved Arthur Anderson, the Big 8 eventually became the Big Four.

Big 6

In 1989, the Big 8 became the Big 6 with the merger of Arthur Young and Ernst and Whinney, to become known as Ernst & Young.; and the Touché Ross merge with Deloitte, Haskins & Sells, to become known as Deloitte & Touché.

Big 5

In July, 1998 Coopers and Lybrand merged with Price Waterhouse, to become Pricewaterhouse Coopers, making the Big 6 become the Big 5.

Big 4

In the 2001 Enron Scandal, Arthur Andersen was the auditing company. They were at one point indicted for obstruction of justice due to the shredding of crucial documents. This led to the demise of Arthur Andersen. Arthur Andersen practices were sold to the Big Four firms Deloitte and Touché, Pricewaterhouse Coopers, and Ernst and Young. Eventually, the conviction against Arthur Andersen was overturned, but still the scandal marked the end of Arthur Andersen, and the Big 5 became the Big 4.

The Big Four is sometimes called the Final Four, meaning basically that other firms will never really be able to compete with the Big Four firms, with the thought being that they are not as credible as the Big Four firms.


The term “accrual” means any single entry recording revenue or expense without a cash transaction occurring.  The accrual accounting process measures the performance and financial status of a business by acknowledging economic events irrespective of when cash transactions transpire.

The premise of this method is that economic events are recognized by the matching principle, which is essentially matching revenues to expenses when the transaction occurs, instead of when the payment is either made or received.

The use of accrual accounting allows current cash flows to be merged with future projected cash flows to provide a more precise representation of a businesses’ current financial condition, but it is complicated making it more costly to implement.

Accrual accounting is the customary accounting method for most companies, except small businesses.  Accrual accounting is the opposite of cash accounting, acknowledging transactions only when cash is exchanged. [click to continue…]