In a nutshell: There’s a difference between accounting and economics, but both are exciting education paths for full- and part-time business students, and can provide valuable insight for small business owners and young managers.
In the business world, money-related occupations make up a large chunk of the industry. That’s understandable, of course. But you can’t be blamed for sometimes getting one occupation in the field confused with another.
Take, for example, accounting and economics.
Both are critical components within business. But while the skills for those who work in either profession can overlap, they are two very different animals.
A Brief Definition of Accounting and Economics
The division between the two comes in how knowledge in math, finance and the use of data are applied.
In accounting, the focus is on recording financial transactions, as well as providing reports that summarize and analyze the numbers. Accountants ensure that financial numbers within an organization balance, and that proper procedures are used in the collection and reporting of those numbers.
Economists, on the other hand, typically work more in the realm of theory or in analyzing more “big picture” financial issues. They are focused on money — its production, consumption and transfer from one area to another.
Degrees in Accounting and Economics
Future accountants and economists often start in similar places. Degree programs in either field begin by covering foundational topics such as math, financial principles, problem solving and developing quantitative skills.
Both areas also require many of the same skills, including communications, an analytical mind and sound decision-making.
From there, the educational paths diverge.
Those studying accounting move onto learning the details of financial reporting, accounting principles and ethics, auditing, tax law, regulatory issues and international accounting (necessary for organizations that do business globally).
To earn the top jobs in the field after graduation, it’s a smart move to get accredited as a Certified Public Accountant or Certified Management Accountant. There are other kinds of continuing education and accreditations to pursue as well.
Economics students move more into the world of economic theory. They learn about theories developed by influential economists such as Adam Smith, John Maynard Keynes and Milton Friedman. They study managerial economics, microeconomic and macroeconomic theory, and economic development.
If you enter an economics degree program, eventually you’ll move onto more complex areas such as game theory, purchasing power parity and balance of payments. Also, most programs explore geopolitical events and their effect on economies (such the effect of war and the Depression on hyperinflation in the Weimar Republic of Germany).
As you can see, the two truly provide very different education and training. This all leads to very different kinds of jobs, too.
Careers in Accounting
Armed with the expertise learned in a quality accounting program, you are ready to take a position as an accountant or auditor.
Accountants record financial transactions as well as report and analyze them. Auditors focus on examining accounting practices within an organization and ensure they are done properly and meet government and industry regulations. The U.S. Bureau of Labor Statistics (BLS) projects 10% growth in the field by 2022 and reports a median salary in May 2016 of $68,150. (All salary figures in this article are provided for information only; conduct independent research to determine salary information for your geographic region, industry and education level.)
Careers in Economics
Economists are employed by governments, private industry, nonprofits and in the academic world. Three of the major employment areas are the following.
Management analyst: Management analysts study data on economic trends and develop recommendations to organizational leaders on moves to make that will place a business in a position to take advantage of those trends. The BLS projects a 14% increase in management analysts by 2026. Median pay in May 2016 was $81,330.
Budget Analyst: The same tactics used in management analysis are used by economists to analyze budgets and make recommendations on where to allocate dollars. The BLS projects 7% growth in the field by 2016. They reported a median salary in the profession of $73,840 in May 2016.
Financial examiners: Financial examiners review the overall finances for organizations with an eye on determining their financial health. They can work in private industry or for government agencies. The BLS projects 10% growth in the field by 2026. They reported a median salary in the profession of $79,280 in May 2016.
Both accounting and economics offer solid, rewarding career paths. Choosing between the two requires assessing where your skills and knowledge will work best over the course of your career.