The "What" and "Why" of Accounting

So "what" is this thing called Accounting all about? Well, the earliest known written records of mankind were of lists of "goods and things" in connection with what was owned by kings and warlords and the like, and of their exchanges of things - sheep, corn, silk, jewels, and "stuff" like that. Fast forward a few thousand years and commerce really picked up, to the point that people no longer acquired new goods by exchanging goods and things, they started using a common currency - coins. Then, things really got tricky in how to keep track of business when business really got busy. No longer were there one or two transactions every so often. Rather, starting in the Middle Ages, businesses arose in which there might be many transactions in a single day! Imagine that! (today there are businesses that do a million transactions a day!). So to keep track of all these transactions, about 600 years ago a means was devised that seemed to do the trick, so much so that it is still in use today with hardly a change. Voila! Accounting!

All of which is to say that Accounting is vital to commerce, and is here to stay!

In a formal sense: Accounting is an information system that measures, processes, and communicates financial information about an economic entity. In an informal sense: Accounting is a language - "thee" language of business. Whether a small company or a big company; whether a private company or a public company; whether a company in business to make money or an entity that is a not-for-profit (think church, hospital; or similar), they all need to keep track of their business: of monies coming in; monies going out; whether the entity is making money; whether the entity is losing money (and if so, will it soon be out of money!). In fact, each of us really needs to do the same for our own personal lives (except we only get paid once or twice a month, usually; and we pay "only" a handful of bills; thus, we can more readily keep track of our financial affairs - just see what's in the bank account or in the wallet!).

But businesses MUST keep track of their financial affairs: to stay in business by knowing how the business is doing; to report to external regulatory agencies such as the IRS or the Securities and Exchange Commission (if a public company); and to provide financial information to the bankers and investors who provide funds to the business and who demand to know how things are going. That's the "WHY" of Accounting!

Which means: there will ALWAYS be jobs for Accountants! Right now there has never been a more demanding need for Accountants. So much so that Accounting is considered one of the "hot" jobs! Starting salaries are in the range of $40,000 to $50,000 per year, with rapid increases for each year of experience and specialization (this will always vary by the individual person; the individual firm and opening; the geographic location of the opening; etc.). And even when things "cool off", there is still always the need for Accountants, even if at more stable rates of compensation. With stable sources of income, Accountants can readily support a spouse and raise a family, to make mortgage payments to buy a house, to lead and pursue the lives most people desire. And because Accounting is "thee" language, knowing Accounting will provide an insight into how the world works, and how one can better oneself, including when even simply volunteering to help a local charitable organization succeed.

And clearly the Berkeley Advantage, of helping each person get their college degree as soon as the person is capable of doing so, provides the opportunity to realize the benefits of obtaining an Accounting degree that much sooner!

And what is really interesting about Accounting: while many people stay with Accounting as their career choice for all their working lives - they enjoy the people; they enjoy the diversity of working with many businesses or for many businesses; they enjoy the prestige of being a professional - many go on to use Accounting within many other functions of running a business - operations; human resources; administration. Thus, the skill of being an Accountant is something that stays with you forever, and benefits you forever, in all aspects of the business environment as well as your own personal life.

And THAT is the "what" and "why" of Accounting! Do let me know of your thoughts and any questions.