How important is an in-depth understanding of Accounting for IB?


Looking to get some advice as I plan out what my next few years will look like at school. I'm currently at a public ivy and since I started here, my plan has been to major in Finance and Accounting. However, since I got my internship at an EB, I'm wondering if there's a point where accounting knowledge has diminishing returns. In my specific instance, I'm debating whether to continue with Accounting and Finance, or Finance and a data science minor (there isn't a major offered, and my schedule likely doesn't allow me to do all 3).

I've taken 3 accounting courses so far, a basic managerial accounting course, and 2 financial accounting courses covering a lot of material except pension accounting (I'm assuming that most courses follow generally the same path?). I actually don't mind accounting at all, but the few data science courses I've taken already have been really interesting, and even if a minor doesn't necessarily have much weight, I do think at least having a base level knowledge of those concepts is going to be important in the future.

I feel confident that I can get a return offer, as I'll be coming in with a little bit of finance knowledge already from my courses, and I hope that I'll be able to make a positive impression through my work ethic and communication skills.  But, I want to be realistic, and I know that not every SA gets a return offer in IB, unlike my old Big 4 internship so I want to do what will make me more marketable in case I have to recruit again, but also set me up for future success. While I know Accounting is probably more directly applicable to IB, I'm just not sure how important stuff like pension accounting really is.

Basically my 3 options:

Accounting + Finance

Finance + Data Science Minor (and squeeze one advanced accounting course in next year)

Finance + DS (and have fewer/easier courses)

 

One thing to keep in mind is that the accounting you learn in school won’t necessarily be highly applicable to what you’re doing in IB. While a foundational knowledge of accounting is obviously important, a major/minor in the subject might require you to take some really niche classes that aren’t relevant to banking at all. There’s a reason why most bankers aren’t CPAs.

I wasn’t an accounting major so I can’t say whether the above is definitively true, but it’s worth investigating on your part before you commit to taking the additional classes.

 

In my opinion you can learn the requisite accounting for IB independently through a more targeted approach and get a better return on your time. A lot of the learning occurs on-the-job anyway by getting exposure to different deals.

 

Between being at a good school, EB internship, and finance degree, your second major/minor has minimal to no impact on your resume.

Basic accounting is necessary for IB, but the tedious tax/pension classes that come with a full accounting major are not going to come up in IB. Take whatever interests you most and gives you the highestGPA and easiest classes. Killing yourself in advanced accounting if they are hard courses has very low ROI in your situation.

 

The way I see it is: your university degree is just a signal to your employer that you can pass the selection process and understand semi-complex topics. IMO, take the easiest classes that still allow you to maintain a façade and with the free time you get, read materials relevant to IB such as guides, financial modeling tutorials etc. This in my experience is the best way to add value to your IB preparation

 

I studied econ and finance for my BSc and Finance for my MSc, all at a target university, chose all the courses that could help me with IB and finance (Fin reporting, adv accounting, M&A, PE and VC, Corp valuation and others). They still came to be less than 10% of the exams I took during uni and only partially useful for the actual job. In my opinion, if you want to learn your profession as good as you can you should find materials by yourself and study them with a focus on the job you want, university courses are made to be broad or, in this case, are useless since he's not trying to become an auditor.

 

You don't need a deep level of financial accountign to the extent a CPA would need to know it.

Accountign relates primarily to modeling in IB. Full-stop. Basically what u do in excel. You should have those accounting terms and their 2nd derivatives. If you don't know these extremely well, you get bucketed in the "non-technical" category of analysts and you wont' see some of the more complex transactions that you would otherwise have seen

 

As someone who added accounting as second major to improve my skillset, I would recommend doing a different major that you have a greater interest in.

I realized a few courses into my accounting major that I only needed to take three classes at most and I would have been fine. The other accounting courses I took were extraneous given that I was focused on breaking into IB at that time. The funny thing about it is that I could never become a accountant for a few different reasons but I loved finance (still do in a sense but working for quite some time removes some of the rose tint).

 

That makes sense, that's kinda what I was leaning towards doing.  I don't think I could really work another major into my schedule, unfortunately, but my thinking was that I could learn some data science and coding, as I think it's going to be increasingly important/marketable in the future, while also taking a 3rd or 4th financial accounting class to really master that knowledge.  For the actual major I'd have to go through tax and everything, which I just didn't view as adding any value unless I wanted to be an accountant.

 

Unless you're going into a quant role in S&T or HF, you'll never use Data Science a day in your life in finance. Bankers don't code.

 
Most Helpful

I double majored in accounting and finance. Most of what you learn in accounting (audit, tax, cost accounting) is not relevant to IB or most careers in finance. That being said, a deep understanding of accounting (probably what your university calls Financial Accounting I and II) is very helpful, especially when it comes to building operating and projection models. That being said, you will learn whatever you need on the job. I've learned more about accounting in IB and my post-IB roles than I did in my four years of undergrad.

I would continue with finance and accounting. You will not use anything from any of these other business-related majors in IB. Minors are largely a waste of time. If you have spare credits, take English classes. The best IBers I ever met were Ivy League-educated English majors. Anyone can build a model, but not everyone can craft the language in a CIM or other marketing material.

 

Thanks!  I've been told that before, my first two years at college I took mostly English and other classes that involved a ton of writing and communication in addition to the mandatory communication I have to take for Finance.  I knew that writing wasn't what I was good at, so I really tried to get better at that rather than taking coding or data classes my first two years which is why I'm in the position of having to choose one or the other now.  Even if I don't pursue Accounting as a major, I think by the time I graduate, I'll have taken Financial Accounting 1-3 so I felt like I'd be in a good position/ahead of most in that respect at least.

 

Depends what you study. I found that Managerial Accounting and things like theories of accounting (I.e. not current accounting standards but what would be best) were absolutely useless and furthermore really painful, while real accounting classes that teach you post-merger accounting etc are obviously very useful. 
 

honestly go for whatever you want 

 

I find that our first-year analysts with accounting knowledge have an easier transition. The others pick up the level of knowledge needed quickly but I do prefer our younger guys to have that background coming in. I caveat this comment that we're a smaller group so no fixed training program/teaching/education period to start and the learning curve isn't taught but rather we rely on assimilation into the team. 

 

So long as you have the basics in accounting you will be fine. Data Science seems to be a growing field so at least its more relevant. 

Though really, classes don't matter in terms of there real world they just signal. So as others have said focus on what you enjoy. Take all the random classes across a variety of subjects that peak your personal interest.

 

Maxime vitae iste molestias omnis eos ut optio. Provident facilis deleniti ratione. Modi corporis consequatur aut.

Hic dolor hic alias sit. Deleniti in ut quaerat qui. Omnis consectetur in est alias necessitatibus harum. Est ea at molestiae excepturi voluptatum et incidunt voluptatem.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”