How is Economics Related to Accounting?
The fields of economics and accounting deal with financial matters, but aside from sharing this general interest, they’re not closely related. Economists are social scientists, while accountants are business majors with special training in business finance.
The Difference Between Economists and Accountants
The fields of macroeconomics and microeconomics consider the role accountants play in the overall economy, but the jobs of these two professions are otherwise almost completely unrelated. Accountants don’t usually work with economists in their day-to-day activities, and economists usually don’t know anything about income statements, balance sheets or business management. Economists are professional academics, and they spend most of their time doing research and publishing articles in journals. Universities and governments hire economists, while businesses and governments hire accountants.
The two main fields economists study are microeconomics and macroeconomics. Microeconomics is the study of individual decisions in relation to the economy as a whole, and macroeconomics is the study of the overall economic outcomes of a nation or society. Economics is a social science because it deals with many issues that can’t be quantified, such as human behavior and psychology. However, most economic principles are based on mathematics, especially calculus and linear algebra.
Employment of Economists and Accountants
Economists can earn bachelor of science or bachelor of arts degrees in their fields. They take a mix of business, liberal arts and science courses as undergraduates, and when they finish, they can continue to graduate school to obtain master’s or doctoral degrees. Without advanced education, economists can’t do professional research, but they can often find jobs in other fields, particularly in business. However, they aren’t qualified to work as accountants because they haven’t learned the methods that accountants use to balance budgets and record expenses.
Accountants are business majors, and they can get master’s and doctoral degrees, as well. There is also a special one-year postgraduate degree that lets accountants become Certified Public Accountants. It’s possible for an accountant to go to graduate school and do academic research, but this career path is uncommon. Most accountants work for businesses handling their credit, payroll, assets, payables and taxes. They uses balance sheets, retained equity reports, statements of profits and loss, and assets and liabilities reports to keep track of their employers’ money.
Controllers and Comptrollers
An accountant with many years of experience can eventually be promoted to the position of controller or comptroller. These similarly named jobs are actually one and the same, but businesses call them controllers and governments call them comptrollers. A comptroller is an elected city official, while a controller is hired by the board of directors of a company. In both cases, they work as the lead accountants of an organization. A controller answers to the Chief Financial Officer, and a comptroller answers to the city treasurer or mayor.
The closest relationship accountants and economists may have is in the allocation of resources by economists to pay accountants’ salaries and the calculation of payroll by accountants to pay economists salaries. This relationship is indirect and could only happen in an organization that hires both economists and accountants, such as a government.
The world of business and finance becomes more sophisticated as new financial instruments are developed and regulations passed to protect the economy. If you’re interested in academic research of financial matters, you may prefer economics, but if you’re more interested in working in industry, you may prefer accounting.