Accounting is likely the most feared and difficult class for the majority of MBA’s. It is memorization intensive, and the specialists in this field typically bypass the MBA and get their Masters of Accounting (MACC) instead, and/or work their way through the CPA exam process. The accounting core classes are typically segmented into two distinct courses: Corporate Finance, and Managerial Accounting. Corporate accounting focuses on the accounting performed by companies for external reporting while the Managerial accounting deals with the allocation and reporting of internal resources. Corporate accounting practices are governed by GAAP, or Generally Accepted Accounting Principles, while managerial accounting is done through the discretion of the managers and the internal accounting department.
Realistically, for the majority of MBA’s the most important accounting principles are managerial in nature, and this is where their focus lies. Corporate finance is more relevant for those interested in Investment Banking, and Private Equity. Both accounting subjects are critical, however, later in a manager’s career.
If you are focused on pursuing a career in corporate accounting…DO NOT GET AN MBA. It will be a waste of money, and not nearly specialized enough for you. Instead, get your MACC and your CPA. Accounting for the most part is viewed simply as a necessary evil and is not given a lot of respect in nearly all MBA’s. It is a mandatory class that everyone simply trudges through, and no one is passionate about. There are also very few interviews that will require any accounting knowledge, with the already discussed exceptions: Investment Banking, Private Equity, etc. Managerial accounting on the other hand is a critical aspect of the MBA, and will help you immediately in your career. Managerial accounting and your command over its methods could prove critical in your perception within an organization. Which expenses are being allocated to your business unit? How are internal purchases accounted for within your organization? Who is getting credit for the sale of your business unit’s products and/or services? Knowing the answer to these questions and how to manage and (unfortunately at times, manipulate) these figures will determine your “success” in an organization. Are you a money maker, or a money spender? How the expenses and earnings are allocated within your organization will have a greater bearing on other’s perceptions than what is actually happening at times. Focus your attention on managerial accounting!