When students join colleges or universities, they may find themselves in a dilemma when choosing undergraduate majors. The most common fields are accounting and finance. They seem pretty much similar but are entirely different in terms of concepts.
Therefore that brings us to the question, what is the difference between accounting and finance? You can seek for financial accounting help or more clarity on the subject matter by getting in touch with us today. Without wasting time, let us look at the comparison between the two fields.
Accounting is the holistic process of recording, maintaining, and reporting of a company's financial records. On the other side, finance is the management of money and investments for individual firms, organization and governments. It is important to note that accounting is a part of finance, whereas finance itself is not a part of accounting.
Both fields differ in the course of work they focus on. Accounting focuses on the day to day flow of the money in and out of the company whereas finance focuses in the management of the organization's assets and liabilities and the planning of the future growth of the company.
Accounting and finance have a different view on the financial statements. Accounting uses the financial statements to check the company's books and the details in the financial statements. On the other hand, finance uses financial statements to formulate business strategies and aid in controlling the operations of the organization.
The two fields have roles and viewpoints. Accounting involves backward-looking, that is reporting what has already happened and ensures the company complies with the laws and standards required whereas, on the finance side, it focuses on the future by playing a role in looking forward and mitigating any losses in the entity.
Another significant consideration is their business purposes. Accounting is responsible for the preparation and communication of the financial statements, whereas finance is responsible for formulating strategies and figuring out measures of adding value to the business.
Critical concepts in accounting include accounting practices and accounting ethics such as business law, tax law, and the accounting theory. On the other side, finance focuses on macroeconomics, international finance, corporate finance, and financial engineering.
The main types of accounting include financial accounting, public accounting, forensic accounting, management accounting, tax accounting, and audit accounting. Kinds of finance include personal finance, corporate finance, public finance, behavioral finance, and social finance, respectively.
Both fields of business make use of specific tools for study. However, in accounting, they make use of the income statement, the cash flow statement, balance sheet, and so forth. Finance makes use of leverage, risk analysis, capital budgeting, ratio analysis, working capital management, and many more.
Career-wise, accounting experts can hold job positions such as accountants, auditors, tax consultant, and many more opportunities related to accounting. Finance, on the other side, offers professional areas such as investment bankers, financial analysts, finance consultants, and many more financial options.