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Everything you wanted to know or should know about accounting

taxguytaxguy 6244 replies385 threads Senior Member
edited October 2013 in Business Major
I thought I would start a thread about majoring in accounting since many people seem to ask the same questions.

1. What is the immediate job outlook? As one professor of accounting has noted, "I haven't seen it this good in decades." There are a LARGE number of jobs for accounting grads. In fact, it probably is one of the best fields for immediate, high paid employment around. What is interesting about accounting, unlike that of other fields like engineering and science, is that accountants are needed in both booming economies and in recessionary economies.

2. What can I do with accounting if I don't want to practice accounting? People seem to ask whether they should major in finance or some other area of business. Without question, an accounting major opens up more opportunities that that of any other business major. You not only can practice accounting, but accountants are found in many areas of management, and also found in the financial sector.

Many folks think that majoring in finance is the major ticket to investment banking. This isn't necessarily true. From what I have seen, accountants, who do very well in school, have as great and maybe even a better shot at investment banking jobs. Accounting enables you to understand the inner workings of business. It is truly the language of business. Thus, many folks in top management have accounting backgrounds.

3. What do I need to get a job with the Big 4 or top consulting firm? For the Big Four, you usually need an accounting degree PLUS grades of at least a 3.3+ overall and in accounting. Moreover, the higher your grades, the better the chance of an interview. Consulting firms also like accountants;however, they will also take folks from other majors as long as you have at least a 3.5+ and/or attend a top named school such as UVA, IVY etc.

4. Should I go to the highest ranked schools for accounting? This question seems to be asked in one way or another many times and is probably the most frequently asked question about accounting.

Answer: As long as a school is accredited ( AACSB accreditation and regional accreditation), it DOESN'T MATTER which school you attend. The reason is that the State Boards of Accountancy mandate the curriculum. Thus, from school to school, probably 80% or more of the courses taken will be the same. Even the books used are usually the same. Thus, going to Wharton, vs. University of Texas, vs. UVA, vs. Baruch College vs. Maryland will probably not increase your job opportunities that much from school to school for accounting jobs. Moreover, the pay is fairly set among starting accounting jobs. Attending a top, name school might get you a few thousand dollars more to start ( and I mean only a few) ,but it usually evens out among school.

You should understand the process: Accounting firm partners usually interview at their local schools. Thus, if you want to live and work in Memphis, Tennessee ( as an example), you probably have an edge going to college in Tennessee than at University of Texas. The same can be said about NY schools. Again, for accounting, it won't make a difference whether you attended Stern ( NYU) or Baruch College.

I should note that there is one exception to what is noted above. Corporations ( that aren't accounting corporations), tend to interview in greater numbers at the better schools. Thus, in that way it might make a difference. However, for accounting jobs with accounting firms, the school is irrelevant as long as it is accredited.

5. What is majoring in accounting like? Accounting is a surprisingly tough major. People think that because the math isn't that sophisticated, it should be a snap. Nothing can be further from the truth! First, accounting is akin to living an SAT all of your life. There is constant problem solving all the time. However, what makes it hard is that it is more akin to law. You have to know reams of information and, most importantly, learn to apply this information to practical problems.

Moreover, accounting tends to be a "weed-out" major. Accounting is not known for grade inflation ,which is akin to engineering. At many schools, it isn't unusual to have a 50% attrition rate among kids who started off in accounting. Some schools, such as Towson University, even have a special comprehensive test that must be passed in order to receive your degree.

Trust me: I don't care if you had all 800s on your SATS, you will find accounting challenging.

6. What are the requirements for graduation. Generally, you would take 24 credits in accounting which comprise courses in intro accounting ( two courses), cost accounting, two courses in tax, two to three courses in intermediate accounting, advanced accounting, and accounting information systems. Accounting students also take courses in economics, statistics (usually two courses),management, marketing, plus the usual load of liberal arts. As you can see, they get a very broad base of business subjects, which makes them eminently employable.

Also, in order to take the CPA, you must have 150 credits. This means that you need 5 years as an undergrad or you can get a masters after you finish your undergraduate degree. Interestingly, the extra thirty credits can be in anything. They don't have to be accounting related. Thus, if you want to double major in sign language, economics, finance, you can for these extra credits.

7.What is the best preparation in high school? Surprisingly, I do NOT recommend that you take any accounting in high school. You will get plenty of that in college. You should take a strong college preparatory program, which should include four years of math, English, history, economics, science etc.

8. How much money can I make in accounting? The answer varies by field and state. Starting accountants with strong GPAs can easily start at $57,000++ at the largest accounting firms and about $46,000 to $51,000 at the mid size firms,although many mid size firms are now paying what the top firms are paying in order to get the quality applicants.

Usually the big 4, start folks at about $57,000 per year. However, they don't pay for overtime,which the mid-size firms do. Thus, the initial pay does tend to equalize among firms.

Corporations tend to pay about $10,000 less to start.

Once you are in accounting, you can receive some nice raises. It certainly isn't unusual for accountants to be making over $100,000 per year, plus a host of fringe benefits, after 6-7 years in the field. See 2006 salary data here:Holland & Associates, LTD. Baltimore Accounting Jobs, Eastern Shore Accounting Jobs, Maryland Tax Jobs

(You should update these numbers by 10% for inflation.)

Partners in mid sized accounting firms earn between $200,000 to as much as $500,000+ per year! Big 4 partners eventually earn over $1,000,000 per year. Try doing that in engineering or science.

However, make no mistake, to make this kind of money, you will be expected to work HARD! In addition, you will be expected to work competently and to provide a lot of chargeable hours for billing. During tax season, it isn't unusual to work 60-70 hours a week or more!

9. Miscellaneous: If you want a job in accounting, you really need to know that accountants are numbers oriented. Thus, the better your GPA, the better your chances. The higher your GPA,the better the chances with the better firms. However, GPA will only get you the interview. You must sell yourself and do well in the interview for you to be hired.

Also, accountants are notoriously bad writers. Lets face it, if they could write well, they might have majored in English. Thus, if you have good writing skills, emphasize that on your resume and interview. Most partners assume that a top notch accounting GPA proves decent problem solving skills and decent accounting knowledge. Having other skills such as strong speaking or writing skills will be a definite plus. Also, having a strong work ethic is crucial. If you are a hard worker, emphasize this on interviews. Finally, having good people skills always comes in handy when dealing with clients and partners.

I hope that I have answered most of your questions.
edited October 2013
2648 replies
Post edited by taxguy on
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Replies to: Everything you wanted to know or should know about accounting

  • taxguytaxguy 6244 replies385 threads Senior Member
    I did note that accounting is a weed out major. Many programs require between a 2.5 and 3.0 overall GPA in their freshmen college year in order to even get into accounting. In addition, you usually have to graduate with a 2.5 in accounting subjects. This should be contrasted with majors in arts and sciences,which normally only require a GPA of 2.0 to graduate.

    Moreover, don't forget that accounting grades are usually not subject to inflation. It is hard to get A's. Even B's aren't that easy to come by.
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  • AJWl3AJWl3 53 replies25 threads Junior Member
    I'm an economics major at Michigan and here we don't have an undergraduate major for accounting, the only option is to take 5 accounting classes. Would this suffice for getting a job at the big four?

    Also can a graduate of a four year school take the extra 30 or so hours at lets say a community college or no?
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  • aj16aj16 591 replies23 threads Member
    Thanks alot. That really does help. Its a nice refreshing change from the math-and-econ-are-the-only-real-majors phobia thats plaguing CC.
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  • DawgieDawgie 1574 replies2 threads Senior Member
    Very nice post taxguy!
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  • g8erbaitg8erbait 21 replies17 threads Junior Member
    Looking for some clarification on the point about how the 30 extra credits need not be in accounting to get your CPA:

    For Florida you need 36 hours of accounting above the elementary level and 39 hours of general business which shall not include less than 6 in business law.

    I am planning on getting a bachelors in accounting and a masters in finance. I will take 21 hours of accounting above the intro level in the bachelors degree. In the masters in finance degree I will take 32 hours of finance.

    Will any of my FIN classes count toward sitting for the CPA? I don't plan on practicing as an accountant, but I just wanted to know.
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  • DaNDHSIrishGuyDaNDHSIrishGuy 146 replies51 threads Junior Member
    Haha, this should shut me up; I have had to ask you everything you had in your post...
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  • taxguytaxguy 6244 replies385 threads Senior Member
    What is a bit odd is that each state has slightly different accounting requirements. However, no state to my knowledge requires less than 24 credits ( and usually 30 credits) for the CPA. Thus, 5 courses would NOT be enough for most states!

    As for Florida, Florida is a strange state because it has odd requirements. I think they do this to keep other accountants out of the state. Yes, their web site does state that 36 accounting credits are required. I don't know if graduate credits are given the same weight.

    At the very least, if you want to meet most educational requirements found in many states, you should take at least 30 credits in accounting, at least one and preferably two courses in business law, two economic courses (Macro and Micro), a course in business or accounting ethics, and one course each in finance, management and marketing.

    Understand, although it is a uniform CPA, each state has their own peculiar educational requirements. You need to check with your state board of accountancy in the state that you want to take the CPA exam. One of the benefits of participating in an accounting program in the state that you will take the exam is that usually that school will meet their own state's requirements and understand the requirements of that state.
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  • chubeebochubeebo 481 replies8 threads Member
    outstanding post, taxguy. you da man when it comes to this stuff.

    forgive me for the noob question. But which companies are the Big 4?
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  • taxguytaxguy 6244 replies385 threads Senior Member
    Chubeebo, I used to know them as the Big 8,but due to mergers, they now comprise the Big 4. They are to my knowledge: Ernst and Young, Deloite Touche, KMPG, and Price Waterhouse Coopers. There are also a lot of firms whose size is just under the Big 4 and a number of large local firms.
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  • kmzizzlekmzizzle 1190 replies58 threads Senior Member
    however, they will also take folks from other majors
    Is this for consulting or accounting too? Can you still do accounting in Big 4 if you major in econ or something?
    What if some schools don't have accounting majors?
    What about a minor (like UCLA I believe)?
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  • Umbopo NambusiUmbopo Nambusi 9 replies0 threads New Member
    Great post taxguy. Like you, I am a CPA. I am a partner in a mid-sized Rocky Mountain firm.

    We are screaming for qualfied candidates. They are getting harder to find, every year. I hope some of you CCers take the challenge laid out by taxguy.

    Your options with an accounting degree are pretty much limited only by your creativity. Your options are:

    Private industry - No CPA certificate required.

    Government - No CPA certificate required.

    Consulting - Usually hard to get into without a CPA certificate, or an MBA and business experience.

    Public Accounting - CPA certificate will be required. Can go with the Big 4, Mid-sized national firms, regional firms, or local firms.

    You can go most anywhere you want and find a job. You can own your own business by eventually becoming a partner, or you can take a safe route and be an employee in private industry or government.

    It was funny when I graduated with my accounting degree in 1988. Many went on to law school. I couldn't afford to, so I went into a big national firm for 3 years. Got my certificate, moved to an area of the country I loved, and worked for a regional firm, where I am now a partner. The part that is funny, is how many went to law school, incurred much more student loan debt (while I was paying mine down) and still make far less money than partners in my firm.

    Money is not everything in life, but unless you end up in some of the IB jobs, or other securities professions, a CPA certificate and hard work will make you more money than any other business degree, and more than most law degrees. And, you will be highly respected by all who you deal with.

    CPAs are quite modest about thier income levels and conservative by nature, thus I think our profession is not known for its income potential, as are some more glamorous or flamboyant professions. As a result, our profession flies under that radar screen for B-School students. My inherent modesty makes me not want to talk about money on a forum, but I think it is worthwhile for potential students to know what the possibilities are, so please excuse my straying from professional norms.

    If you are a partner in a Big 4 firm, or any firm for that matter, you will have had a very satisfying career, both in terms of challenge and financial rewards. If partnership is not your interest, there are many other options in CPA firms for you to find your niche and become an expert. And, laugh at all your fellow grads who snickered at the "bean counter" imagine. Who's laughing now?
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  • kmzizzlekmzizzle 1190 replies58 threads Senior Member
    THe profession flies under the radar because you don't make a lot unless you are partner (which would be like 20+ years already which is a long time)
    A lot being > 200k
    Lawyers make far more, but they also put in more hours
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  • southpasdenasouthpasdena 1688 replies30 threads Senior Member
    partners at big 4 average around 800k, and it can take a while for a partner to reach that level. Few will break 7 figures.

    Starting salary at the big 4 is highly dependent on geographical location. New hires in LA this year probably hit a little under 57k. Highest paid are in NYC, then San Jose, then San Fran, and it goes down from there. Offices in Ohio for example, or a city like phoenix will receive between 49-51k. Then you have offices such as denver and austin which are standouts because they are highly sought after locations with small offices, so you will be paid slightly less than the col would justify.

    Mid-tier firms may start out at a higher salary first year, the difference will come in bonus size and/or yearly raises.

    Their are 2 national firms that have the greatest chances at competiting with the big 4, grant thornton and bdo. The industry is known to be heavily consolidated when you look at the percentage of the largest companies and who audits them. For example in the US 97-98% of the 1500 largest companies are audited by the big 4. Many times this is because they need the resources of the big 4, but many times it is also because of the stigma that arises when a public company switches auditors, or the fact that their is some perception of better quality with the big 4 - which is not true. Many studies have showed that a lot of companies have been dissatisfied with the service that they received. GT in England is posing a great threat to the big 4 in regards to financial services.

    Although the big 4 are international, they do not work as one international entity. You can find strategy consultant articles explaining this more.
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  • southpasdenasouthpasdena 1688 replies30 threads Senior Member
    And accounting firms are known to be rather inefficient when in comes to marketing - articles can be found on the internet about this as well if interested.
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  • taxguytaxguy 6244 replies385 threads Senior Member
    Kimzizzle asks,"Is this for consulting or accounting too? Can you still do accounting in Big 4 if you major in econ or something?"

    Response: Generally, you should have an accounting degree if you want to work for an accounting firm..DUH! Some of the larger firms do have consulting divisions. If they do, they might take a few economics folks;however, even the consulting divisions usually want accountants with computer science or some other speciality.

    As far as lawyers making more money than accountants, it depends. It isn't as easy to get a job as a lawyer due to a glut of lawyers. In addition, many lawyers don't make the big bucks. Usually successful litigators can make a bundle, however, real estate lawyers, divorce lawyers, tax lawyers and many others don't make as much money as you would think.

    However, don't forget,lawyers go to school for an extra two years over that of accounants. The partners of big firms make about what the partners make at top accounting firms.
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  • southpasdenasouthpasdena 1688 replies30 threads Senior Member
    well if your a top candidate that wants to go to law school - a top 20 law school - then you have to compare 49-60k salary depending on city with the ability of 160k + bonus up to 100% of salary (depending on firm).
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  • taxguytaxguy 6244 replies385 threads Senior Member
    Southpasdena, the folks who make 100K+ to start as lawyers are from top schools who do among the very best in their schools. Thus, you are talking about ther top 1-2% of the law school graduates. In addition, most lawyers who work for top firms and receive 100k++ are working like animals. Many usually hate their jobs and find more stable jobs with less stress.

    Also, you can't compare law to accounting. Accounting is generally an undergraduate major, although you can get a masters in accounting ,which would satisfy the CPA requirements. Law is a graduate degree.

    They also do somewhat different work. If you go into accounting, you have close to a 100% chance for a job ( as long as you have some personality at the interview) and should make a good living. Lawyers are having a hard time finding any job. When they do, most don't make any significant money for quite a while. Yes, you hear about the few who started out making $120,000++ or who won a huge law suit in the millions,but these are the small exceptionswhen compared to the large number of students graduating from law schools.

    You have to compare accountant salaries and job opportunities to other undergraduate majors and maybe MBA Candidates. Even with this ,an accountant, with an MBA or MS in a specialized field, might make a lot more money with a consulting firm or the consulting department of an accounting firm.

    Bottom line, as one CPA noted, accountants can make a LOT of money and also have a life. In fact, they can make more than most other fields of endeavor. They just keep quiet about it so their profession seems to "be under the radar" among college students. In addition, even if they don't make partner or have their own practice, a good CPA is pretty well guaranteed a decent career for life! How many fields of employment,whether it be math, economics, english, history, management, MBA grads etc., can say that?

    Finally, I should note that if you want to be in big demand forover and make big bucks, you eventually want to be competant in some speciality,whether it be tax, financial statement preparation and auditing, banking, auditing of tax exempt organizations, computer controlls, forensics etc. A good specialist is hard to find, and they make great money because of it.
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  • 2VU06092VU0609 3682 replies62 threads Senior Member
    Excellent post, taxguy! Last week I attended a conference with my state society for members in education. Our last session was "Skills for New Graduates." We had three panelists, including a partner for a Big 4 firm. He emphasized that in addition to a reasonable GPA (3.5+), a desirable candidate would have excellent writing skills, some kind of EC activity(ies) to show leadership and some kind of interest beyond the classroom, and excellent interpersonal skills. The example he used for interpersonal skills was of a candidate who would approach the campus interviewer and introduce themselves first rather than hang back. His office has a strong international presence and he said any experience in language, particularly Spanish, Chinese, or Japanese would be a plus. All three panelists used the term "self-starter" repeatedly.

    One other comment - a number of states have reduced the requirements for sitting for the CPA exam to 120 hours (BA/BS), although liscensing is not complete until 150 hours are obtained and the experience requirement is fulfilled. The panelist from the Big 4 firm indicated that it would be a huge plus if a candidate came to the interview with parts (or all) of the exam complete since the new hire would be far more productive by not being torn away to study at night for the exam.
    For those reading this post who may be close to sitting for the exam, our state board director encouraged students to sit for the FARS section ASAP since the shift to IFRS will be incorporated into the exam soon (2 years?) and students may not have had the classroom exposure on this shift in governance that is about to occur and he mentioned that it wasn't incorporated into current textbook literature as of yet.
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  • SBDadSBDad 787 replies60 threads Member
    As a CPA, I'd like to add another couple thoughts.

    1. Taking the CPA exam. Make no mistake about it, the CPA exam is tough. It takes two full days of testing (was 2 1/2 when I took it) and by no means do most people pass the whole thing on their first sitting.

    2. I came to the conclusion in college that I really didn't like pure accounting - and especially auditing. I was lucky enough to sign up with Coopers & Lybrand in their tax department upon graduation and have been very happy with that career choice ever since. I have found that taxation is much more akin to the practice of law than the practice of accounting.

    3. By cutting back my practice and cherry picking which clients I keep, I will probably never retire. It keeps me engaged and will be a nice source of seasonal income in my golden years.
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  • DawgieDawgie 1574 replies2 threads Senior Member
    Accounting is good.
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