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Accounting vs. Economics: An Overview
Accounting is a profession that records, analyzes, and reports income and expenses for individuals and businesses. Economics is a branch of social sciences concerned with production, consumption, and market forces. An economist uses data to help shape policies for interest rates, tax laws, and employment.
Key Takeaways
- Accountants track the flow of money for businesses and individuals.
- Economists monitor trends that drive production and consumption.
- Accounting and economic data influence the fiscal policies of both businesses and governments.
Accounting
Most individuals deal with accountants when filing tax returns. In business, accountants track money into and out of an organization. They use various methods to record and analyze budgets, expenses, and revenue and produce financial records based on their data.
An accountant’s book is a historical record of an individual or organization’s financial life for a specific period. In the U.S., accounting standards, known as Generally Accepted Accounting Principles (GAAP), ensure a company’s financial statements are complete.
Publicly traded companies rely on accountants to file quarterly and annual financial reports required by the Securities and Exchange Commission (SEC).
Important
Economics
Economics focuses on how resources are allocated. Macroeconomics studies the distribution of resources within an ecosystem, such as a nation. It analyzes factors like the inflation or productivity rate that affect how efficiently the economy works. Microeconomics studies the behavior and decision-making of individuals and businesses within an economic ecosystem.
Economists compile data and analyze how goods and services are produced and distributed. Economists help develop economic policies for governments and project the impact of policy and regulatory changes. They may hold positions in government, academia, or the financial services industry, where they interpret and forecast market trends.
Fast Fact
Economists use statistics like Gross Domestic Product (GDP), the total value of goods and services produced within a country’s borders in a specific period, to measure an economy’s output.
Careers and Salaries
Both accountants and economists help businesses, industries, and governments to strategize and plan, make sound financial decisions, and set fiscal policies. Professionals in both fields base their analyses and projections on real-life markets, conditions, and events.
In 2024, over 1.5 million accountants and auditors were employed in the U.S. According to ZipRecruiter, salaries range between $53,500 to $78,500 with top earners making $95,000 annually.
An economist can work in multiple fields and positions, including banking, business consulting, financial services, government, public policy, or urban planning. In 2024, an individual with a master’s degree in economics earned an average of $156,100 as a financial manager, while a budget analyst earned an average of $84,940 annually.
What Are the Most Important Economic Indicators in the U.S.?
The U.S. Bureau of Economic Analysis compiles monthly, quarterly, and annual data to analyze the health of the U.S. economy. The principal indicators include Gross Domestic Product (GDP), personal income data, and international trade and its value for goods and services.
How Does Economic Data Affect Government Policy?
Data compiled by the BEA is used by entities such as the Council of Economic Advisers for briefing White House officials on U.S. economic conditions, the Federal Reserve Board to achieve maximum employment and price stability, and the Congressional Budget Office to project budgetary needs.
What Is the Difference Between an Accountant and a CPA?
All Certified Public Accountants (CPAs) are accountants, but not all accountants are CPAs. Both may perform audits, provide financial advice, and complete tax returns. However, CPAs are licensed by a state board of accountancy, have passed the CPA exam, and have completed a specific amount of general accounting experience. To work in public accounting, professionals must earn their CPA license.
The Bottom Line
Accountants help individuals and businesses track and forecast their financial records. They may work in taxation, public accounting, or auditing. Economists compile and analyze data that influence fiscal policies. Those in government employment may work with an organization such as the Bureau of Economic Analysis to research employment or production data.
