What is an accountant?
/An accountant is a person who records business transactions on behalf of an organization, reports on company performance to management, and issues financial statements. Here are several examples of the types of transactions in which an accountant may become involved:
Issuing an invoice to a customer, which involves recording a sale and account receivable.
Receiving an invoice from a supplier, which involves recording an expense or asset and an account payable.
Issuing a salary or wage payment to an employee, which involves recording an expense and the outflow of cash.
Reconciling a bank statement, which likely produces adjustments to the cash account.
In addition to transaction recordation, an accountant produces a number of reports. The key types are as follows:
Financial statements are issued to the owners and/or operators of a business, as well as to lenders and other creditors. The financial statements include the income statement, balance sheet, and statement of cash flows.
Management reports are issued to the management team. The reports are highly customized to the needs of each entity, and may cover such topics as the sales of certain product lines, investigations of cost variances, sales returns, and an analysis of overtime incurred.
Tax reports are issued to several government entities. The reports provide detail regarding the amounts paid for income taxes, property taxes, sales taxes, use taxes, and so forth.
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Accounting Processes
An accountant may be involved in the creation of a number of processes within a business, which typically include several controls to ensure that assets are properly managed. Examples of such processes are as follows:
Shipments to customers. Shipping documents are prepared when goods are shipped to customers, which are then sent to the accounting department. These documents are used to prepare customer invoices.
Receipts from suppliers. Receiving reports from the warehouse are sent to the accounting department, where they are matched with authorizing purchase orders and supplier invoices (a process called three-way matching). If this paperwork matches, then the accounting staff prepares payments to suppliers.
Cash receipts from customers. When payments are received from customers, the accounting staff checks off the outstanding customer invoices to which these payments relate, and then send the payments to the bank. This increases the firm’s cash balance and reduces its accounts receivable outstanding.
These processes need to be revised whenever the operations of a business change, such as when a new product line is offered to customers.
Areas of Accounting Specialization
There are many sub-fields within accounting in which a person can specialize. For example, there are tax accountants, cost accountants, payroll clerks, billing clerks, general ledger accountants, and collection clerks. This level of specialization is needed in order to increase the efficiency with which certain tasks are conducted. These specialized areas all operate under the supervision of a controller.
Accountant Certifications
An accountant may choose to pursue a certification, of which the most prestigious is the certified public accountant (CPA) designation. A CPA license is required before a person can audit the books of a client organization. Another option is the certified management accountant (CMA) designation, which is targeted at improving the management accounting and financial accounting skills of accountants. The Certified Internal Auditor (CIA) designation is intended for those who work on auditing tasks within a business.