What is Financial Accounting?

There are many different types of accounting, each of which comes with different responsibilities and requires different skills. If you’re interested in pursuing a career in accounting, the first thing you’ll need to do is decide which of these types is the best fit for you. One popular option you may want to consider is financial accounting.

Responsibilities of a Financial Accountant

Financial accounting is a type of accounting that relates to the operations of a business. Some of the job responsibilities include creating reports, summarizing data, and recording information. The most important documents for a financial accountant are the financial statements of a company, which include the balance sheet, cash flow statement, and income statement.

The ultimate goal of a financial accountant is to provide a sufficient amount of information so that that outside of the company (creditors, shareholders, taxing agencies, etc.) can accurately assess the company’s value. Financial accounting jobs exist in both the private and public sectors.

Necessary Skills in Financial Accounting

Based on the responsibilities described, it should come as little surprise that some of the skills you’ll need for a successful career as a financial accountant include knowledge of accounting principles, organization, and the ability to focus on details. Some skills that may be less expected include self-motivation and high ethical standards. Financial accountants must also work well both alone and with a team and must have excellent communication skills. These latter skills are often a key differentiator between financial accounting and financial analysis. While both require analytical skills and working with numbers, financial accounting roles often require more interpersonal and communication skills than many financial analysis positions.

Career Path

Many positions exist within the field of financial accounting. The career path of a financial accountant will vary largely depending on the size and type of organization. One potential career path includes starting as a financial analyst in an entry-level role then moving up to a role as a financial accountant, then moving up to a role as a controller or financial manager, which consists of many of the same responsibilities as a financial accountant, but with the addition of overseeing others.

One of the benefits of a financial accounting position is that it provides experience and knowledge relevant to many other careers. Since the role of a financial accountant is based on the business operations of a company, financial accounting may help prepare you for any role that requires a deep understanding of business operations.

Education and Experience

To become a financial accountant, you’ll need at least a bachelor’s degree in a relevant field such as accounting, business, economics, or finance. While a master’s degree is not necessarily required, having one will often help you stand out. If you work in the public sector, you will likely also need a CPA (Certified Public Accountant) credentials. Those in the private sector will likely not need a CPA.

A role as a financial accountant is not typically an entry-level job. To be considered for a financial accounting position you will typically need one to three years of experience, though the exact requirements will depend upon the employer and the role.

Compensation for a Financial Accountant

The level of compensation for a financial accountant will vary and often be related to the size of the employer. Typically, larger companies offer higher compensation, while smaller companies offer lower compensation. According to Glassdoor, the average annual base salary for a financial accountant is $53,748. While there is some variance in this number depending on the company and the position, the range of salaries is considerably smaller than in many other financial roles. This is partly due to the mid-level nature of the role, meaning financial accounting is neither an entry-level role nor is it a more senior-level role.

Growth Projections

According to the U.S. Bureau of Labor Statistics, the job outlook for accountants is expected to increase by 6% between 2018 and 2028, which means the creation of 90,700 additional accounting jobs is expected by 2028. This projected growth for accounting jobs makes it a promising field for those at the beginning of their careers since it means they have a higher chance of finding a job compared to positions with less positive growth projections.

Is a Career in Financial Accounting Right for You?

Accounting is an in-demand field with the potential for lucrative pay and engaging work. Since financial accounting involves working with some of the most fundamental aspects of business operations, it has the added advantage of providing experience relevant to many different fields and careers, which makes it an excellent option for those considering a career in accounting.

Related Course: Financial Accounting Professional Certificate

Explore the core financial accounting tools that will help you understand annual reports and footnotes – creating a solid understanding of the financial statements.

About The New York Institute of Finance

 The New York Institute of Finance (NYIF) is a global leader in professional training for financial services and related industries. NYIF courses cover everything from investment banking, asset pricing, insurance and market structure to financial modeling, treasury operations, and accounting. The New York Institute of Finance has a faculty of industry leaders and offers a range of program delivery options, including self-study, online courses, and in-person classes. Founded by the New York Stock Exchange in 1922, NYIF has trained over 250,000 professionals online and in-class, in over 120 countries.

See all of NYIF’s training and qualifications here.