Are accountants good at math?
A degree in accounting is a great way to ensure that you are on the path to a stable career with plenty of opportunities for advancement and promotions. No matter what the state of the economy is, accountants are always in demand. The mistake many prospective accounting students make is that they believe they must be excellent at maths. While accounting is all about numbers, there is no need for an accounting student to be a math whiz. Let us take a look at the differences between maths and accounting.
As you consider career options, you may find yourself drawn to jobs in the accounting profession. However, especially if it’s been a while since you’ve been in a math class, you may find yourself wondering what types of math skills you will need for an accounting degree.
While the public perception of accountants often involves images of harried, vaguely rumpled professionals bent over their desks, peering incessantly at seeming endless, cramped columns of mind-numbing numbers, there actually isn’t that much of a focus on math in accounting. While accountants do need to be competent in math, they also need to have basic computer skills, strong analytical abilities, good interpersonal skills and a talent for effective communication.
What is Math?
Mathematics is the science that deals with the logic of shape, quantity and arrangement. Math is all around us in everything that we do. Math is a core building block for everything that we experience in our daily lives; including mobile devices, architecture, art, money, engineering, and even sports. Math can be defined as the use of numbers and equations to solve a problem.
What is Accounting?
Accounting is the recording of financial transactions along with storing, sorting, retrieving, summarizing, and presenting the results in various reports and analyses. For example, an accountant may be asked to run numbers and information through a spreadsheet to determine how much revenue a company generated in a period and then compare that to the corresponding expenses that will determine income. These numbers are very exact, and the results need to be accurate.
Math in Accounting
Ironically, the most difficult math that many accountants face is found in the lower-level math classes they take as students earning their degree at a college or university. Although accountants do handle a lot of numbers in the course of their professional duties, the majority of the math they perform themselves is basic. Accountants need to be comfortable working with numbers so that they can examine and interpret figures in the data they gather. Still, they generally do not need to perform complicated mathematical operations. In today’s technology-heavy world, most complicated mathematical functions are performed by computers.
Computers in Accounting
Much like virtually every other professional field, accounting has come to rely on computers. While they do not need to be computer whizzes, accountants need to be prepared to use basic office software to complete daily tasks and communicate with coworkers, managers and clients. They should be especially proficient with the various programs and information technology tools used to accomplish typical accounting tasks. The majority of accounting degree programs now include courses on information technology to help prepare graduates to function successfully in a real-world office.
Analysis in Accounting
Accountants do gather and organize financial data, but that is just the beginning of their job. By using their skills to analyze and interpret the facts in front of them, accountants transform data into useful information. In the taxation field, this might mean determining how much is owed in taxes, suggesting methods a client could use to lessen their tax burden or pointing out areas where changes need to be made to bring a business into compliance with tax laws. For forensic accountants and auditors, this is more likely to involve reviewing records to find discrepancies and trace them to their source. Sometimes these discrepancies are deliberate, and accountants help identify the culprits of fraudulent or criminal behaviour.
Communication in Accounting
The ability to interact and communicate with others effectively is vital in virtually every area of accounting. Accountants need good interpersonal skills that allow them to interact professionally and diplomatically with coworkers and clients. This is especially true of auditors and forensic accountants who often find themselves facing opposition as they attempt to gather the information they need to perform their assigned tasks. Even accountants who work independently or run their accounting firms need to be able to interact successfully with other people; clients are unlikely to continue working with an accountant who makes them uncomfortable. The best analysis is useless if it is not understood. Hence, accountants who can communicate clearly and persuasively, translating often-complicated concepts into understandable formats, are far more likely to succeed in their chosen profession.
Math Courses in an Accounting Curriculum
If you’re considering majoring in accounting, you might be relieved to learn that it is more important for aspiring accountants to be good at research, logic, problem-solving and using computer software than to excel at advanced mathematics. Of course, you should expect to take some math coursework during your college career. Like students in other majors, students of accounting must complete their college’s general education requirements, which usually include at least one or two math classes. As an accounting student, you might have to take a course in algebra or precalculus as well as an applied calculus or business calculus class. Coursework in statistics can also be important, especially for teaching accounting students how to analyze financial data.
The type of accounting degree you earn can play a part in how much math is a part of your curriculum. At the undergraduate level, there are a variety of possible degrees you can earn in the subject of accounting. A Bachelor of Accounting or Bachelor of Accountancy (BAC) degree focuses more on the foundational concepts and practices of accounting than on developing students’ math skills. A Bachelor of Science in Accounting (BSACC) degree emphasizes technical accounting and analytical skills and is more likely to include some advanced mathematical coursework.
You can also choose a more general business degree, as a Bachelor of Business Administration (BBA) or Bachelor of Science in Business Administration (BSBA) with a concentration in accounting. These programs include studies in a broad range of business and management topics with some emphasis on accounting principles and practices. BBA and BSBA degree programs are less likely to require extensive studies in mathematics, but they also focus more on a general business core than on more specialized accounting topics.
How Accountants Use Math
The reason the BLS reports that you don’t need complex math skills to be an accountant is that the math used to manipulate numbers in accounting is generally basic. The notion that accounting is all about math is one of the most prevalent myths about accounting. Accountants follow formulas to create financial statements, but those formulas are consistent and typically require accountants to plug in the right numbers simply. The math used in these formulas can be done with a calculator or spreadsheet software. The credits and debits found in accounting can be handled with simple addition and subtraction. What accountants do need is familiarity and a degree of comfort with working with numbers, especially in the form of percentages, fractions, and decimals.
If you aspire to become a certified public accountant (CPA) or attain another accounting certification, then you will need to perform enough math to pass your exams. Some accounting professionals report that the math needed to pass their credentialing exams is more complex and difficult than the math they use daily in their work as an accountant.
In addition to math skills, communication skills, analytical skills, organizational skills, and attention to detail are important qualities for accountants to have, according to the BLS.
If you want to be an accountant, but you’re not good at math, don’t give up hope. Instead, speak with an advisor or career counsellor at your school or an established accounting professional to find out how much math you will really need to do to earn your accounting degree. You may be pleasantly surprised to find that you already have sufficient math skills for the job. If so, your education is more a matter of learning accounting theories and how to apply them.
Here’s the good news. It may come as a surprise, but math, though important, is not necessarily the main skill you will need in accounting. Mastering basic math formulas will be important, but other skills will also help you toward success. Computer skills and an ability to analyze and manage data may be equally or more important, depending on what kind of job you pursue.
Accounting programs usually require business and management courses as well as statistics. While some degrees may require a higher math course, it’s really lower math operations and basic algebra that will help you most. So if you struggled through calculus in high school or managed to avoid it entirely, don’t despair. Most accounting programs will have a good, basic math class to bring you up to speed. A comfort level with whole numbers, fractions, decimals, percentages, ratios, order of operations, exponents and some general algebra is what you will most often need to draw on in accounting work.
Remember that a lot of mathematical work these days is handled via computers, so you may need less skill in doing the actual calculating but plenty of confidence in knowing how to set up and input the data, run a spreadsheet and then analyze and interpret the data once it’s all entered. Staying abreast of current and emerging technology will be very helpful.
Remember Other Skills Are Also Important
Analyzing and interpreting data may be one of the most important skill sets of all. If you have shown aptitude in quantitative, problem-solving abilities, it is likely that you will be well prepared to study accounting and to pass your CPA licensing exam eventually. And while math is one way to work on your quantitative skills, you may find that courses in logic, economics or physics may be just as important.
Much of what you will end up studying may depend on the kind of accounting job you pursue. In general, you will likely find an ability to follow specific accounting procedures and to understand tax law important. You may need to study certain kinds of skills and procedures, such as those needed to become a financial auditor or to handle a company’s payroll.
Experts seem to agree that a lack of confidence in math shouldn’t stop you from pursuing an accounting degree if you have good basic skills and a willingness to review and solidify those skills. Accounting is not simply crunching numbers, but being able to use the numbers to help individuals and companies achieve their financial goals that matter the most. If you have an interest in pursuing accounting, knowing what types of math skills you will need for an accounting degree is important, but gaining a broader view of an accountant’s job overall will truly help you decide whether to enter the field.
What If I Can’t Do the Math? Where Do I Get Help?
Ok, maybe you don’t remember or never really learned how to do some of this stuff, and you thought it was hard when you were a kid. Maybe as a kid, you even decided that you were going to hate math. But here’s some good news: the above content is much easier as an adult! Why? Primarily because you are more motivated, more mature and experienced, know how to study and ask questions, and because as an adult, you won’t tolerate lazy or confusing math teachers. You have many good options. They are: 1) Take a basic math class that contains the above topics. One class should be enough. (Note: “Business Math” is a math class that applies the above topics to common business situations. These classes are useful, but probably best to take after you have completed a basic math class if you want an additional review.) 2) Use a math tutor or math lab at school. 3) Do your math review for only what you need. There are many good basic math books available. Just be sure that they contain lots of examples and problems with complete and detailed solutions.
What If I Want To Major in Accounting?
Very little changes, even if you are an accounting major! However, you will need to successfully complete a business statistics class as well as being sure that you are comfortable with basic algebra. (Both basic statistics and basic algebra are pretty important as you continue in business subjects.) Some schools may require more advanced topics such as linear programming or calculus for accounting majors. However, you will never, ever, need this more advanced math in accounting. The courses are really just used as screening devices and to add status to a program. You just have to put up with them or find a different program.
The modern accountant must be able to shift between the various layers of data within an organization. They must work to ensure that the processes in a business facilitate proper data entry and setup. They are able to dive into the transactional details and understand the nature of each line item. However, this is more uncommon than not on the day-to-day basis. Most of the accounting work performed today begins at the high-level summary- We then use a concept known as “management by exception” where we identify outliers rather than review every single line item within the calculations. We use health checks and metrics to validate that the system is working correctly and is in line with business expectations. We use variance analysis on a daily, weekly, monthly, and annual basis to identify weaknesses in the systems and to correct them.
The role of the modern accountant doesn’t stop at just validating data, results, and processes, either. That is what is known as your license-to-operate. Your baseline competencies. Accountants today also need to be focused on working closely with the business to communicate the insights and trends within the data and to provide guidance so that the business can then make good decisions. The soft skills such as communication, influencing, and selling are now the differentiation factors that separate the leaders from the rank and file.
Accountants must still be able and willing to dig into the minutiae of the data inputs and the flow of transactions when necessary. But this should only be the first stage of professional development that serves as the building blocks for everything else. What an accountant must be able to do today not just to survive, but thrive, is to understand the value stream of our function. At the highest end of the value, a stream is the professionals who can explain accounting terms to non-accountants with clarity and serve as the neck which can turn the head of the business whichever direction will produce focus and results.
The world of accounting today is based on having confidence that after being set up properly, that a system will handle rudimentary 1+1 scenarios so that we can focus on the human-type work where we have to be able to explain the complex relationships between data, business actions, and all the dynamics in-between. Accounting today is about not just putting two numbers together to reach the total but to take that information and turn it into a decision support model.
So, going back to where we had started with the question, “Are accountants good at Math?”
Yes, accountants must be good at understanding the math of everyday transactions, but this serves only as your license to operate in the field. The world is evolving and changing fast, with an emphasis on value delivery. Spending your time reconciling pennies to the general ledger will not advance your career or serve the needs of the business. The best accountants understand where we’ve been, where we’re going, and are self-training and upskilling themselves on the knowledge and abilities required to meet the challenges of today.