Why Learn Accounting? 6 Benefits

Financial accounting has been called the universal language of business, so it makes sense that all business professionals should be fluent.

While you might think non-accountants don't need to study financial accounting, an understanding of key accounting concepts, like the accounting equation and financial statements, can be helpful for all professionals.

Here are six reasons why any professional can benefit from understanding financial accounting.

What Is Accounting and Why Is It Important?

Accounting refers to the process of reporting and communicating financial information about an individual or organization.

In simpler terms, accounting is how a business records its financial information. Accountants, or anyone else tasked with accounting activities, are concerned with capturing a snapshot of an organization’s financial health at a specific point in time.

Some common accounting activities include:

• Recording transactions
• Collecting financial information
• Compiling financial records, reports, and statements
• Preparing tax returns
• Ensuring an organization’s taxes are paid and its financial records comply with the law

There’s a common misconception that only finance and accounting professionals need to be familiar with accounting concepts, but financial accounting is a critical business skill for all professionals.

Whether you’re an entrepreneur who needs to prepare financial records for your company, a business professional trying to better understand and contribute to your organization’s financial decision-making process, or someone who wants to make sense of your own finances, studying basic accounting can provide many benefits.

6 Benefits of Studying Accounting

1. You’ll Be Able to Manage Your Own Finances More Effectively

Be honest: Can you explain where all your money goes after your paycheck gets deposited? With some accounting knowledge under your belt, you’ll gain a deeper understanding of what goes on with your personal finances and learn important skills, such as how to effectively track expenses and work within a budget.

To learn more about how finance and accounting impact your daily life, watch the video below featuring Harvard Business School Professor V.G. Narayanan, who teaches the online course Financial Accounting:

2. You’ll Gain An Understanding of Current Events

There’s no shortage of scandal in the accounting world. You may have heard stories of illicit manipulation of financial documents for personal gain, or seemingly small accounting mistakes with disastrous consequences.

With a basic understanding of accounting, you can understand what these companies have done wrong and why it matters. You’ll also learn how current events related to finance and accounting might impact your organization and industry.

3. You’ll Be Able to Make More Meaningful Contributions at Work

Picture this: You’re in a staff meeting and the chief financial officer (CFO) wants to discuss the past quarter’s financials. If you’ve had an introduction to accounting, you’ll not only be able to understand what the CFO is talking about, but also chime in with your own financial insight and opinions.

With accounting knowledge under your belt, you’ll also be able to determine the financial health of your organization on your own. With this information, you can glean meaningful insights and bring suggestions for improvement to upper management. Ultimately, understanding your company’s finances will help you be more effective in your role.

4. You’ll Be Primed for Entrepreneurial Success

If you own a business or are considering entrepreneurship, you need to understand basic accounting principles to be successful.

Managing costs, cash flow, invoices, vendors, and payroll are all critical components of running a company. Some important accounting skills for entrepreneurs include preparing financial statements, determining how profitable your business is, forecasting future sales, and communicating financial information to stakeholders and investors.

As a business owner, studying accounting can put you one step closer to reaching your entrepreneurial goals.

5. You’ll Have Career Advancement Opportunities

Even if you're not an accountant by trade, accounting skills can help you advance your career. You’ll become more effective in your current role and a more attractive candidate for advanced roles.

Learning financial accounting also presents a pathway for you to transition into a finance or accounting role. According to the Bureau of Labor Statistics, employment in financial occupations is expected to grow five percent by 2029, which is faster than the average rate for all occupations. By studying accounting, you’ll develop the skills needed to qualify for such roles.

6. You’ll Improve Your Decision-Making Capabilities

Organizations utilize financial statements like balance sheets and income statements to make data-driven decisions regarding investment opportunities, budgets, and resource allocation.

By learning accounting, you’ll be able to analyze financial statements to help inform business decisions and facilitate communication between your organization and its stakeholders. Not only will accounting skills make you a better decision-maker at work, but you’ll also learn to make more evidence-based decisions in your personal life.

Learning Financial Accounting

No matter your current role, learning about financial accounting can be highly beneficial. You’ll be able to understand your personal and organizational finances, make more data-driven decisions, and advance your career.

Do you want to develop or hone your financial accounting skills? Explore our eight-week online Financial Accounting course and other finance and accounting courses to discover how managers, analysts, and entrepreneurs leverage accounting to drive strategic decision-making.

This post was updated on September 17, 2021. It was originally published on October 2, 2015.