What is Accounting?
Accounting is defined as a process of recording both receivables and expenditures that pertain to a business. The accounting process includes storing, sorting, retrieving, summarizing, and presenting these transactions to upper management or oversight agencies and regulators. California’s economy, as measured by its Gross Domestic Product (GDP), represents 14.6% of the total U.S. economy. If California were a country all by itself, that percentage would make it the 5th largest economy worldwide. California’s manufacturing sector accounts for 18.2% of goods produced around the world.
The ten top industries in California are:
- Construction - $111.3 billion
- Arts, entertainment, recreation, accommodation, food services - $130 billion
- Retail trade - $153.4 billion
- Finance and insurance - $155.6 billon
- Wholesale trade - $158.2 billion
- Educational services, healthcare, social assistance - $218.3 billion
- Information - $287.8 billion
- Manufacturing - $320.7 billion
- Professional and business services - $397.3 billion
- Real estate, rental, and leasing - $504 billion
The film industry in California is fueled by Hollywood and Disneyland. The production of movies in Hollywood brings a large amount of revenue for the state. In 2015, about $49 billion was contributed, with the creation of about 2.4 million jobs.
Each and every one of these industries must hire accountants to maintain their books, track their transactions, call in debts owed the company, and even file their taxes and SEC paperwork. No matter what industry is booming near you, and in California that’s most of them, the skills of an accountant are going to be absolutely necessary.
Accounting Education in California
An accountant is usually a detail-oriented professional who may prefer to work in a structured environment. In most businesses, the accountant is one of the most important professionals. In their role, they are highly depended on since they prepare and inspect financial records. They work to ensure that every financial transaction is stored accurately and that taxes are paid on time.
Accountants make use of financial statements and numbers to create an easy-to-understand picture of the organization’s well-being. They may be skilled in several areas, including the obvious math and law, since they must make sure that a company follows all laws and regulations related to the taxes they pay and also the industry they are a part of. The tax code itself is a hugely complicated part of the law, and then there are reams of regulations covering most industries. The SEC and other regulatory bodies were created to govern the financial industry, and accountants must stay apprised of all changes to the rules they enforce.
Associate Degree in Accounting (AS)
Earning a two-year Associate of Arts or Science in Accounting can allow students to move quickly into entry-level accounting positions within this profession. While graduates of an associate degree program won’t begin working as full-fledged accountants, they can work as bookkeepers, accounts payable or receivable clerks, or as office managers.
This degree level exposes students to the very basic parts of accounting. They should graduate with the knowledge and skills to work as accounting specialists, where they will assist the accountants or accountant on an office’s staff. They may work as an associate auditor, helping the auditor out. They may also help with tax preparation or payroll services. Some may be full-charge bookkeepers, according to the Bureau of Labor Statistics, allowing them to do the books for a number of clients and gain experience while earning an income.
Accounting students in an associate degree program may be mulling whether they should begin working as soon as they graduate, or if they should finish their final two years of school in a bachelor’s degree program. If they choose to move onto a four-year degree, they’ll see a little overlap between both programs, but a bachelor’s will provide much more in the way of opportunity for advancement and income enhancement.
Bachelor's Degree in Accounting (BS)
Undergraduate students who earn their bachelor’s degree in accounting may begin to work as accountants immediately. In staff accountant positions, they will be responsible for their employer’s financial records. Completing a bachelor’s usually takes four years, though, if a student wishes to earn their CPA in the future, they may want to take a few extra business courses to smooth the path later on.
If a student is interested in an accounting degree, they may be able to specialize in a specific accounting field. This includes financial accounting, government accounting, tax accounting, and forensic accounting, as well as others. Your focus in an accounting bachelor’s degree can lend itself well to specific industries, and you can choose one with the intention of gaining entry to certain accounting positions, such as those with banks or one of the Big Four.
Master's Degree in Accounting (MS or MC)
A master’s in accounting is definitely a good investment if you are looking to take the CPA exam, focus your studies on a particular area, or generally move your career forward. At this level, students are often looking for ways to advance in the field. Along with accounting and related services, graduates are able to work as financial analysts, corporate accountants, fraud examiners, public accountants, auditors, and in many other positions in taxation, banking, or insurance.
Graduates will have learned high-level analytical skills, how to use the latest technology, and will have gained a deeper knowledge of accounting concepts within their specialization.
Graduate students who choose to earn an MBA in Accounting also benefit from a broad base of knowledge that cuts across several business disciplines. They may gain exposure to marketing, finance, and strategy but the main focus is how these parts of accounting interact with business. It is a master’s in business administration after all; accounting is just one of many available specialties with this type of degree.
PhD Degree in Accounting (PhD)
A PhD in Accounting program may be housed within a college of business. The degree generally prepares students for research careers or provides greater access to the academic world. A good PhD accounting program should offer broad-based training that stresses skills development in carrying out empirical research in the accounting field and using archival data.
This research can be focused on developing research skills that answer questions related to corporate governance, financial reporting, managerial accounting, auditing, and more. The research performed often depends on the interests of the student, as they choose the topic and their teachers help them refine their process.
Students may also make presentations at national accounting conferences and publish their research articles in refereed journals. These include The Accounting Review, Information Systems Research, Academy of Management Journal, IEEE Transactions on Big Data, Journal of Accounting and Economics, Journal of Financial Economics, MIS Quarterly, and others.
CPA Exam Education Requirements in California
First and foremost, make sure your school is accredited as accepted by the State of California before you take the courses you'll need to become a licensed CPA. According to the California Board of Accountancy (CBA) you'll need a minimum of a bachelor's with an accounting emphasis, as well as 150 semester hours in courses specific to accounting before you can sit for the CPA licensure exam. This should take around four years. While the bachelor's degree can be in any subject you wish to select, the state policy is that 150 course hours must cover specific content including a minimum of 24 units of accounting, 24 units of business, 20 units of accounting study, and 10 units of ethics.
California has specific requirements to become an accountant and one of the first steps is obtaining an associate degree (AA). The requirements are narrowed even further by detailing the following full list of subjects be taken by students:
Accounting Subjects: 24 Semester Hours
- Financial Reporting
- Financial Statement Analysis
- External & Internal Reporting
Business Subjects: 24 Semester Hours
- Business Administration
- Business Communications
- Business Management
- Business Law
- Business-related law courses offered at an accredited law
- Computer Science & Information Systems
Accounting Study Subjects: 20 Semester Hours
- Minimum six semester units in accounting subjects (as listed above)
- Maximum 14 semester units in business-related subjects (as listed above)
- Maximum nine semester units in other academics relevant to business and accounting work with a maximum 3 units from any one area
- Maximum four semester units in internships or independent studies in accounting or business subjects
- Skills-based courses in Communications, English, Journalism, and the Physical, Life, Natural, and Social Sciences
- Foreign Languages/ Cultural & Ethnic Studies
- Industry-based courses which may include courses in the following disciplines: Architecture, Engineering, and Real Estate
Professional Ethics Study Subjects: 10 Semester Hours
A minimum of 3 semester hours in accountants’ professional responsibilities or accounting ethics at an upper division level or higher is required.
- Maximum seven semester hours in courses in any of the following subject areas: Auditing
- Business, Government and Society
- Business Law
- Business Leadership
- Corporate Governance
- Corporate Social Responsibility
- Human Resources Management
- Legal Environment of Business
- Management of Organizations
- Organizational Behavior
- Professional Responsibilities
In addition, the ethics portion may be comprised of a maximum three semester hours in courses from the following disciplines:
But the course title must contain one of the following words or terms:
- Introduction; General; Fundamentals of; Survey of; Introductory; Principles of; Foundations of.
This course requirement list is quite strict and credits cannot be used to qualify more than once. For example, if you take a three credit hour course titled "Business, Society, and Government" you could use all three credit hours towards your Business or Ethics requirement or split the hours with one going towards Business and two going towards Ethics requirements but you'll find that you cannot use the class as three hours towards Business as well as three hours of learning toward Ethics requirements.
If you have earned your master's degree in accounting it will satisfy the 20 semester hours of accounting study, and the hours completed in the fulfillment of the master's degree can be counted toward the other three educational areas: 24 semester units of accounting subject, 24 semester units of business-related subjects, and 10 semester units of ethics study. In addition, completion of a Master of Accounting, Taxation, or Laws in Taxation is equivalent to the 20 semester hours of accounting study.
Taking the California CPA Exam
You may sit for the exam once you have earned your bachelor's degree and have completed the 24 semester hours each in accounting and business. The California CPA exam is overseen by the California Board of Accountancy, the state board associated with the National Association of State Boards of Accountancy (NASBA), so your first step will be to start the application process on their website. Your school transcripts must be submitted directly to the CBA so that should be your first step after creating an application account. Keep in mind that most schools allow two to six months until degrees are posted on official transcripts and another 10 to 15 days to process a transcript request so there may be an extended time frame from when you start the process and when you are eligible to sit for the test.
Make sure all information is correct on your application, and keep your account information updated if you move during the process. The initial application fee is $100 and, if you need to reapply at a later date, the fee is $50. The CBA does comply with Title II of the Americans with Disabilities Act, so if you require reasonable accommodations if you have a physical or mental disability or medical condition, don't keep it to yourself, you should let them know in advance.
The exam itself is comprised of four sections and you may take them separately or all at once, though most people spread them out since they last four hours each and are particularly difficult. You should know how you plan to take the sections and in what order long before you sign up.
- The Auditing and Attestation (AUD) section covers generally accepted auditing standards and procedures as well as the ability to apply them in auditing.
- The Business Environment and Concepts (BEC) section assesses your knowledge of responsibilities of the profession as well as the legal implications of business transactions as they relate to accounting and auditing.
- The Regulation (REG) section evaluates your knowledge of principles and procedures for federal income, managerial accounting, estate, and gift taxation, and accounting for governmental or a not-for-profit association.
- The Financial Accounting and Reporting (FAR) section covers knowledge of generally accepted accounting principles for businesses, including financial accounting concepts and standards as well as their application in public accounting engagements.
Because the exam sections may be taken individually, you will pay separately for each section as follows:
- AUD $208.40
- FAR $208.40
- REG $208.40
- BEC $208.40
It will take about a week to process your payment, at which time you'll receive your Notice to Schedule (NTS). You'll need the NTS for admittance to the exam so keep it in a safe place.
The test is given in three month windows with the first two months of each window being the time frame for sitting for the exam. They are as follows:
You may take one or all four test sections in any given window but may not take the same section twice in the same window. The test is given at Prometric Testing Centers throughout California so you'll be able to choose a testing center site convenient to your location. When you arrive at the testing center you are required to have your NASBA issued NTS and two forms of valid, current identification (ID) including one with a photograph. You will not be allowed to sit for the exam if you do not meet these requirements, and these are the only items you'll be allowed to carry into the exam room. All other possessions will be stored in a locker during the testing period.
Test scores are released approximately two weeks after the exam is completed and can be found on your CBA account, which is updated daily. A score of 75 or higher is a passing grade, and you have an 18-month window to complete and pass all four sections of the exam. Failure to complete all four exams successfully within the 18-month time frame will result in having to take one or more exams over, even if you passed that section in the past.
Continuing Professional Education Requirements
Your CPA license is valid for a two-year period, and it expires every other year at midnight on the last day of your birth month. The renewal fee is $120 and you must provide proof of continuing education requirements (CE) when you renew your license.
Your CE courses must be completed within the past two-year time frame and a minimum of 12 hours must be in non-technical subject areas such as the following:
- Auditing and Accounting
- Computer and information
- Financial planning
The other eight hours of CE will be in non-technical subjects such as:
- Communication skills
- Negotiation and motivational techniques
- Marketing and sales
- Office management, practice management, and personnel management
- Word processing
Because continuing education requirements may change you should keep abreast of the subject through CPA organizations and associations as you work in the field.
Become an Accountant in California
Future accountants aren’t limited to only one type of accounting. If they prefer one field over another, they may be able to focus on that in their accounting degree program. While they are in school, accounting students often begin to develop a preference for one field over others. There are a number of fields in which you can specialize.
- Financial accounting
focuses on collecting financial information and including it in external reports. Accounting majors in this specialization are introduced to the detailed information regarding the accounting framework. These include Generally Accepted Accounting Principles (GAAP) used in the US or the International Financial Reporting Standards (IFRS).
- Internal auditing
focuses on the examination of the company’s financial systems and transactions. An internal auditor looks for weaknesses in the accounting control system. They look for mismanagement, fraud, and waste and report everything they find to the company’s management.
- Public accounting
investigates the financial statements and supporting account systems of client companies. The public accountant works to offer confidence that the financial statements gathered by clients accurately represents their financial results and position.
Other fields include tax accounting, government accounting, cost accounting, and more. The main way to get into accounting is through education. There really isn’t any other way. However, there are some accounting positions that require more than just a bachelor’s or master’s degree. If you want to work as a CPA, you’ll also need to pass the four-part CPA exam and gain experience under a licensed CPA. If you want to work as an enrolled agent, you will have to gain certification. And so on.
Careers for Accounting Graduates
- Staff Accountant
Staff accountants will work within the accounting department of their organization. Their responsibilities include maintaining the general ledger, working on financial reports, going over financial statements, helping with audits and budgeting, and reconciling accounts. After spending some time in this role, they may advance to senior accountant status. They are responsible for productivity, reporting costs, margins, and expenditures for their organizations.
- Financial Controller
This position might also be called the chief accounting officer or financial comptroller. The professional in the role oversees day-to-day accounting functions, works on forecasting and budgeting, takes care of tax issues, and integrates finance operations.
- Corporate Controller
The corporate controller oversees all accounting and financial functions within an organization. They also perform financial risk assessments, establish and carry out financial policies, and prepare annual budgets and forecasts.
- Tax Manager
This professional prepares and files state and federal tax returns for individual clients or for companies. They also develop and carry out strategies to help their clients comply with current tax legislation.
- Chief Financial Officer (CFO)
The CFO manages the company’s finances and is responsible for financial reporting. They determine the financial risks and opportunities. They help to establish and track financial goals, budgets, and objectives.
- Business Intelligence Manager
A graduate who has earned an accounting degree in California may eventually work as a business intelligence manager. These professionals manage teams of analysts or developers.
- Financial Analyst
After earning a degree in accounting, financial analysts may take responsibility for the financial planning of a company. At the very least, they gather information, forecast future revenues and expenditures, and create reports for managers so that they can establish cost structures and determine budgeting for upcoming projects.
- Benefits Specialist
Benefits specialists are often members of the human resources department of a company or organization. After earning their degrees in accounting, they may be hired to work coordinating employee benefits and making sure that employees are getting the best possible deal so that the company can attract high-quality talent. This might include health reimbursement accounts, short-term and long-term disability, dental, vision, group health, and more.
A certified public accountant must complete a bachelor’s degree in accounting and at least some additional coursework in business/accounting before they are eligible to take the CPA exam. Once they complete the test, they can be granted a CPA license. These accounting professionals work as advisors to individuals or companies, and they are one of the only accounting specialists who can file paperwork with the SEC.
- Accounts Payable/Accounts Receivable Specialist
An accounts payable takes care of the paying the bills for the expenses of an organization. They go through invoices and expense reports; they resolve accounting discrepancies, and charges expenses to the correct accounts.
An accounts receivable specialist works on the incoming payments, seeing that they get into the correct account and maintaining an accurate bookkeeping record. They may also be required to contact customers or vendors who have fallen behind on their payments.
- Budget analyst
Budget analysts work to determine the correct allocation of project funds. They may also track the budget of an ongoing project so that they can warn a company if there is a likelihood the project will take more than the previously allotted funds.
A bookkeeper records, manages and monitors the financial transactions for businesses or individual clients. They record sales receipts and vendor invoices, along with other financial transactions. They have met the associate degree requirements for this position.