The key difference between financial and managerial accounting is that financial accounting is aimed at providing information to parties outside the organization, whereas managerial accounting information is aimed at helping managers within the organization make decisions. Generally accepted accounting principles (GAAP): The rules financial accountants have to follow when handling accounting transactions and preparing financial statements. Financial accountants can’t just throw numbers on the income statement, balance sheet, or statement of cash flows; a level playing field must exist between businesses so that the individuals reading the financial statements can compare one company to another.
The Financial Accounting Standards Board (FASB) is the private-sector body that establishes GAAP for all non-governmental entities. To become a CPA, you must first complete a certain number of accounting and business-related courses in college. General ledger: The record of all financial transactions taking place within a business during a particular accounting cycle, ordered by chart of account number.
Financial accounting uses three methods of depreciation based on time: the straight-line, declining balance, and sum-of-the-years’-digits methods. As a financial accountant, you may choose to work in public accounting (doing jobs for multiple business clients) or private accounting (performing accounting work only for your employer). Explain and review issues of business law and how they relate to financial accounting and management.
You can also choose to specialize in governmental accounting, not-for-profit accounting, forensic accounting (which relates to legal proceedings or testimony), or other specific fields. In addition to general education requirements, you take core business classes such as Financial Accounting, Managerial Accounting, Business Law, Principles of Management, Economics, Finance, and Marketing. You also take more specific accounting courses, such as Intermediate Accounting, Federal Income Tax, Accounting Information Systems, and Auditing. This module uses the terminology of The International Financial Reporting Standards (IFRS).
Essential skills: Successful financial accountants bring great communication skills (both oral and written) to the job, as well as decent computer skills. Personality traits: The best financial accountants have a desire to work independently, even when they’re part of a team; a love for research, detail, and logic; and the willingness to listen and learn about a variety of industries. Develop your skills in explaining, analysing and applying the mechanism of double-entry bookkeeping and the accounting cycle.