How Do Accountants Use Math?

A person who is interested in studying accounting may wonder, “How do accountants use math?” Knowing what skills are required in order to be an accountant could help a person plan which courses to take and decide whether or not this is the right career for them. Here are several ways in which accountants use math for their work.

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Basic Arithmetic in Accounting

Accountants use basic arithmetic or use software that offers these calculations. For example, a tax accountant who serves individual or married heads of household would use addition and subtraction to figure out the total income and taxable amount after allowed deductions are subtracted from the total income. Most accountants use software, and they just need to input the numbers in the right places. The software performs most calculations.

Comparing Multiple Options

An accountant would also use arithmetic to make comparisons of multiple options. For example, an accountant might compare unit costs using different suppliers. An accountant might figure a person’s federal income taxes with and without itemizing in order to determine which option offers the lowest tax burden to the individual. Accountants may also make comparisons between different deduction options in order to see which one works best for the client when there are different acceptable choices.

Analyzing Figures and Detecting Fraud

According to the Bureau of Labor Statistics, accountants also use math in order to analyze figures. They may do this in order to track a company’s expenses over time. After conducting the analysis, the accountant might offer recommendations on how to decrease those expenses. They may point out how much different expenses have increased. For example, they might indicate that the client’s electricity bills increased by 8 percent over 12 months, internet and phone service increased by 2 percent and heating and air conditioning by 4 percent. The client could then take action in order to lower the rate of increase in some of those expenses. Accountants also analyze figures in order to detect possible fraud. This is often performed as part of an audit.

Interpreting Facts and Figures

Accountants use math in order to interpret facts and figures. This requires some basic and intermediate knowledge of mathematical concepts and theories. The accountant should also be familiar with the formulas used in order to calculate figures. Accountants may create charts or graphs as a part of their interpretation. The charts or graphs would be set up in a way that the accountant could explain the information to a layperson in a way that the person could easily understand. Accountants also use math in order to translate technical information so that non-accountants can make sense of it. For example, an accountant might show a company owner that they have lost money for three of the past four quarters and offer suggestions on how to remedy the situation.

Accountants use different types of math in different ways, but math is not the only skill that they use in their jobs. Accountants also need to be comfortable with and adept at software and technology and have good communication skills in order to serve their clients. Knowing the answer to the question of, “How do accountants use math?” could allow a person to make an informed decision about their career path.