Financial accounting is the process of recording, categorizing, and reporting the transactions of a business. In contrast to other fields in accounting such as personal accounting or managerial accounting, financial accounting is specifically concerned with the preparation of financial statements for public use as required by banks, government regulators, shareholders, and other stakeholders. These statements typically include a company’s income statement (also known as a profit and loss or P&L statement), balance sheet, and statement of cash flows.
Accurate financial accounting plays a critically important role in financial management, as these statements collectively provide an agreed-upon framework for both internal and external parties to evaluate the financial health of a company. As such, professionals in this field must have a rigorous understanding of accounting terminology and concepts as established in the Generally Accepting Accounting Principles (GAAP) that are standard in the U.S. - and potentially the International Financial Reporting Standards (IFRS), which are increasingly used by multinational corporations.
Businesses of all kinds must produce financial statements in line with GAAP and IFRS methodologies, as required by taxation authorities as well as potential investors and lenders. Thus, accountants with the ability to organize and maintain financial records, rigorously apply financial accounting principles, and produce clear reports according to these standards are always in demand.
According to the Bureau of Labor Statistics, accountants and auditors earned a median annual salary of $71,550 as of May 2019. These jobs are expected to grow as fast as other jobs in the economy, since they are dependent on the growth of businesses requiring their services. And, while entry-level positions may require only a bachelor’s degree in accounting, job prospects will be best for those with Certified Public Accountant (CPA) recognition, a masters of science in accountancy, or a master’s in business administration (MBA) with an accounting concentration.
Absolutely. Coursera offers a wide range of courses and Specializations in business and finance topics, including financial accounting, from top-ranked schools such as the University of Pennsylvania and the University of Virginia. You can even pursue a masters of science in accounting from the University of Illinois at Urbana-Champaign’s prestigious Gies College of Business - a top-three university in the field.
Regardless of whether you’re a beginner looking for introductory-level education or a mid-career professional looking to dive deeper into a specific topic or pursue your master’s degree, Coursera lets you learn remotely on a flexible schedule that fits with your existing work or family life. And, with a lower tuition than on-campus alternatives, you don’t need to be an accounting expert (yet) to know that learning online is a smart decision for your own finances.
The skills and experience that you might need to have before starting to learn financial accounting could include having a strong interest in understanding financial statements and being comfortable working with numbers, spreadsheets, and income statements. To do this work, you might need to already have a good sense of financial discipline. This might include having organizational skills, paying close attention to detail, as well as being capable of both analytical and critical thinking. Because financial accounting involves preparing financial statements for companies to show their financial performance and status to interested outside parties, it's crucial that those working in financial accounting get the numbers absolutely correct.
The kind of people who are best suited for work that involves financial accounting may include those who are extroverted, sensing, thinking, and judging. It’s a personality type known as ESTJ. Being extroverted to learn financial accounting is helpful, as accountants often have to interface with CEOs, department heads, and business leaders, so communication skills are necessary. The sensing aspect means that you may learn to use all five senses to judge a situation well. A thinking person seeks to find logical explanations to problems and challenges, thus helping to make objective decisions. And having a judging aspect in your personality means that you may enjoy structure and organization in your life more than others. These personality characteristics have been shown to be in more than one-third of accountants.
You might know if learning financial accounting is right for you if you develop an interest in areas like budgets, numbers, and financial statements. If previous work has found you getting passionate about analyzing numbers in worksheets, journal entries, and general ledgers, then accounting might be an area to learn more about. Our world will always need people who can track financial figures, understand cash flows, and balance costs and expenses. Accounting may be right for you if you find yourself often seeking to manage the numbers in your home or business.