The classes typically required for an accounting major can be put into three groups:
required accounting courses, required non-accounting courses,
and accounting electives. The required accounting courses usually include financial accounting,
managerial accounting, intermediate accounting, tax, audit, and accounting information systems.
Financial accounting covers fundamental accounting concepts like debits and credits, and focuses on
the three main financial statements: the income statement, the balance sheet (aka the statement
of financial position), and the statement of cash flows. Intermediate accounting builds on financial
accounting by introducing more advanced concepts, but you're still focused on making the financial
statements for investors and creditors. Managerial accounting goes in a completely
different direction. It shows you how managers use accounting information to make decisions.
Here's an example of how these courses would cover a topic like inventory differently. In financial
accounting and intermediate accounting, you'll learn how to account for inventory,
how to record an inventory write down, and how inventory errors affect the financial statements.
In managerial accounting on the other hand, you'd learn how to make production budgets to forecast
your inventory need, how to determine the amount of inventory that needs to be sold in order to
break even, and when to reorder inventory. So managerial accounting is about helping
the company's managers make better decisions while financial accounting and intermediate
accounting are about producing financial statements for people outside the company,
like investors and creditors. Note that some schools split intermediate accounting into two
courses whereas other schools divided into three courses. Thus you'll be required to take at least
three to four courses in financial accounting, one course in the basic financial accounting, and two
or three courses in intermediate accounting. When it comes to managerial accounting, you might only
have to take one course although some schools require a second course called cost accounting
that builds on the principles for managerial accounting. When it comes to difficulty,
students usually say that tax is the most challenging required course.
This is because there's a massive number of tax rules, and the rules frequently change.
A tax textbook from 1999 would be useless today, whereas a managerial accounting textbook from 1999
wouldn't be all that different from a textbook used today. When it comes to auditing students
don't usually find the course all that difficult, although, some people think it's boring.
You'll spend most of the semester talking about auditing the financial statements,
so all your knowledge from financial accounting and intermediate accounting will come into play.
You can't be a great auditor unless you have a strong grasp of financial accounting. Finally,
accounting information systems will probably be the first course where you get a really
heavy exposure to Microsoft Excel. Your instructor might also introduce you to one or more types of
accounting software learning accounting software can be helpful. But, the company that ultimately
hires you when you graduate might not use the same accounting software that you learned in class.
Most accountants use Excel, however, so learn as much of that as you can. Next, let's discuss
the required non-accounting courses. Accounting majors typically need to take corporate finance,
macro and/or microeconomics, a management course, a marketing course, a math course,
and a statistics course. In corporate finance you'll learn about the time value of money. This
can be really helpful when you get to intermediate accounting and have to calculate the issue price
of a bond. You'll also discuss decision rules like NPV, IRR, and the payback method. These topics
are sometimes covered in managerial accounting as well so there might be some overlap there.
In microeconomics you'll talk about things like supply and demand, and in macroeconomics you'll
talk about GDP and the unemployment rate. If you're required to take a course in management,
you could encounter a variety of topics as there are many different types of management courses. In
a strategy course, you'll learn about porter's 5 forces, and about doing a SWOT analysis.
In an organizational behavior course, you'll learn about power and politics in organizations.
In an operations management course, you'll learn about bottlenecks, lean thinking,
and the bull whip effect. If you have a choice which type of management course to take,
I suggest taking organizational behavior if you're into psychology, strategy if you
like game theory or big picture thinking, and operations management if you're into supply
chains and want to build your quantitative skills. Accounting majors are sometimes required to take
a marketing course as well. If you are forced to take a marketing course just remember it's only
one semester and marketing usually doesn't cause permanent damage. You'll probably be required to
take a basic math class and a statistics class as well. Contrary to public opinion, accounting does
not require advanced math skills. So you can relax if you don't do that well in calculus.
But I encourage you to pay very close attention in your statistics class. The rise of data analytics
and the changing role of accountants means those statistics skills could come in handy. Finally,
let's discuss accounting electives. This is where things get really fun. Most schools offer advanced
accounting, advanced tax, advanced auditing, non-profit and governmental accounting, and
financial statement analysis. Advanced accounting is more financial accounting so you could think of
it as an extension of intermediate accounting. You'll spend a lot of the course talking about
how to account for business consolidations, but you'll also talk about topics like how to account
for derivatives. Advanced tax is a deep dive into the tax rules for corporations and partnerships.
This class can be brutal in terms of difficulty, particularly if you have a bad teacher.
But you should absolutely plan to take the course if you plan to do any tax work in your career.
If you plan to work as an auditor then taking advanced auditing should be a priority.
And if you think you might one day want to work in the public sector or work for an NGO,
then taking non-profit and governmental accounting could be a really valuable learning experience.
The financial statements used by non-profits and governments aren't the same as those used by
for-profit companies, and these topics are rarely covered in the introductory financial accounting
or intermediate accounting courses. Students usually love financial statement analysis as this
is where accounting concepts come to life. You'll dive into companies annual reports and use ratio
analysis and other techniques to analyze companies business performance. Depending on your instructor
you might learn a lot about financial statement modeling or predicting financial statement fraud.
Now, some schools also offer accounting electives like accounting ethics, law for
accountants, sustainable reporting, forensic accounting, and data analytics for accounting.
Many schools also offer a special topic course where you discuss current issues in accounting.
This class can be really fun because you're getting to discuss cutting-edge topics.
Now, large universities sometimes offer an accounting research course. This course would
give you an overview of the academic literature in accounting and it'd be really helpful if you're
thinking about becoming an accounting professor. Some schools in the U.S. also offer a course in
IFRS, and this can be really helpful if you're planning to do work outside the United States. So,
which elective should you take? Well that depends. If you plan to get a job in public accounting,
then you'll need a professional certification. In that case, you should take electives that will
help you pass the exam to obtain your professional certification. For students in the U.S., that
would mean taking advanced auditing or advanced tax, non-profit and governmental accounting,
and advanced accounting. These classes would help you pass the CPA exam. But maybe accounting
is your second major, and you don't even plan to become an accountant. Maybe you'd like to
break into investment banking or another finance role. In that case, you'd want to take financial
statement analysis, advanced accounting, and data analytics for accounting. Or maybe you plan to
pursue a PhD in accounting and become a professor. If that's the case you should definitely take
the accounting research elective as well as some additional electives in statistics and economics.
The key is to choose the career path that you plan to take, and then choose electives that
allow you to achieve success in that career path. And that's it! I hope you enjoyed this video. If
you'd like to share your experience with an accounting course make sure to comment below.