What is an accountant?
An accountant is a financial professional who records, reviews, and analyzes financial information for an individual, company, government, or nonprofit. Typical work includes tracking income and expenses, preparing financial statements, ensuring transactions are recorded correctly, and supporting budgeting, forecasting, and tax compliance. Some accountants focus on taxes, others on internal controls, audits, or management reporting.
Short history (big-picture)
– Professional organization roots: the first U.S. national accounting association formed in the late 1800s; formal licensing of certified public accountants (CPAs) began shortly after.
– Industrialization increased demand for reliable financial records as businesses grew and outside investors required evidence of company performance.
– After the Great Depression, new securities laws and the creation of regulatory bodies raised the need for accredited accountants to prepare audited, transparent reports for public companies.
– Today accountants work across private practice, corporations, government, and non‑profits.
Key duties and skills
Duties (common tasks)
– Bookkeeping and transaction recording.
– Preparation and review of financial statements (balance sheet, income statement, cash flow).
– Tax planning and tax return preparation.
– Internal audits and external audits (checking accuracy and compliance).
– Cost analysis, budgeting, and forecasting.
– Advising on efficiencies, risk mitigation, and regulatory compliance.
Skills and tools
– Technical knowledge of accounting standards (e.g., GAAP or IFRS).
– Analytical ability and attention to detail.
– Familiarity with accounting software (e.g., QuickBooks, ERP systems) and spreadsheets.
– Communication skills for explaining numbers to non‑accountants.
– Professional ethics and judgment.
Standards, ethics, and legal responsibilities
– Accounting standards: In the U.S., Generally Accepted Accounting Principles (GAAP) guide how financial statements are prepared. Internationally, many firms use International Financial Reporting Standards (IFRS). These frameworks aim to make financial reporting consistent and transparent.
– Fiduciary duty and ethics: Licensed accountants such as CPAs owe legal and ethical obligations to clients and third parties; they must act honestly and exercise due care.
– Liability: Accountants can face legal claims under common law (professional negligence, breach of contract) and under statutory securities or tax laws if they fail to provide appropriate services or give negligent advice.
Common professional credentials
– CPA — Certified Public Accountant: a state‑licensed accountant who has passed the Uniform CPA Examination and met state education and experience requirements. CPAs can perform audits and sign certain reports for public companies.
– CMA — Certified Management Accountant: focuses on management accounting and strategic financial management.
– CIA — Certified Internal Auditor: specializes in internal auditing and internal control assessment.
Pay and market demand (U.S.)
– Median annual wage for accountants and auditors was $79,880 in 2023 (U.S. Bureau of Labor Statistics). Actual salary varies by location, industry, experience, and credentials.
– As of August 2024, there were roughly 671,855 CPAs in the United States (National Association of State Boards of Accountancy).
Accountant vs. CPA — the difference in plain terms
– All CPAs are accountants, but not all accountants are CPAs.
– Accountant (general): usually has an accounting or finance degree; performs bookkeeping, financial reporting, tax prep, and internal analysis. No single national license is required for many accounting roles.
– CPA (licensed professional): must meet specific education and experience rules, pass a four‑part national exam (the Uniform CPA Exam), and maintain continuing professional education. CPAs have authority to perform audits and submit certain filings to regulators.
How to become a CPA — checklist (typical U.S. path)
1. Earn a bachelor’s degree in accounting or a related field.
2. Complete any state required credit hours (many states require 150 semester hours total; this often means an additional master’s year or extra coursework).
3. Gain the required supervised work experience in accounting (varies by state—often 1–2 years).
4. Apply to your state board of accountancy and register for the Uniform CPA Examination.
5. Pass all four parts of the Uniform CPA Exam.
6. Apply for state licensure once education, exam, and experience requirements are met.
7. Maintain the license with required continuing professional education (CPE) hours.
Small worked example — cost‑savings impact
A small retailer has revenue of $500,000 and total operating expenses of $420,000. Net income = revenue − expenses.
– Net income = $500,000 − $420,000 = $80,000.
An accountant reviews operations and identifies a 5% reduction in operating costs is achievable:
– Cost savings = 5% × $420,000 = $21,000.
– New expenses = $420,000 − $21,000 = $399,000.
– New net income = $500,000 − $399,000 = $101,000.
Result: The 5% reduction in operating costs increases net income from $80,000 to $101,000 — a $21,000 increase or a 26.25% rise in net income (21,000 ÷ 80,000).
When to hire an accountant (short checklist for businesses)
– You need regular, reliable financial statements for decision‑making or loans.
– Tax returns and tax planning are becoming complex.
– You’re preparing for an audit or external reporting obligations.
– Growth or transaction complexity exceeds internal bookkeeping capacity.
– You want objective cost, risk, or profitability analysis.
Bottom line
Accountants translate economic activity into reliable financial information that businesses, investors, and regulators use to make decisions. Licensing (CPA) elevates responsibility, permitting audits and formal filings and imposing stricter education, testing, and ethical rules. Demand for accounting skills is steady because every organization needs accurate records, tax compliance, and financial analysis.
Selected sources
– American Institute of Certified Public Accountants (AICPA) — CPA Exam overview: https://www.aicpa.org
– National Association of State Boards of Accountancy (NASBA) — How many CPAs are there?: https://nasba.org
– U.S. Bureau of Labor Statistics (BLS) — Accountants and Auditors occupational profile: https://www.bls.gov/oes/current/oes132011.htm
– International Accounting Standards Board (IFRS Foundation) — IFRS standards information: https://www.ifrs.org
– U.S. Securities and Exchange Commission (SEC) — Financial reporting and auditing requirements: https://www.sec.gov
Educational disclaimer
This explainer is for educational purposes only. It does not constitute professional, legal, or tax advice. For personal guidance about a specific situation, consult a licensed accountant, CPA, or appropriate professional.