The terms finance and accounting are frequently interchanged. While both are concerned with the administration and management of an organization’s assets, the scope and focus of each is distinct. While accounting and finance are sometimes confused, there are important distinctions: accounting focuses on the flow of money in and out of a company or family, whereas finance is a broader term that encompasses how assets and liabilities are managed.
Finance
Finance is the study of how a person or organization develops and uses capital, or how they handle their money. Investing, borrowing, lending, budgeting, and forecasting are all examples of this.
Accounting
Accounting, on the other hand, is the act of recording and conveying financial data about a person, company, or organization. Accounting tasks include recording transactions, gathering financial data, preparing reports, and assessing and summarising performance.
Differences
1. Basics
Accounting focuses on the daily inflow and outflow of money into and out of a firm or institution, whereas finance, is a broader word covering asset and liability management as well as future growth planning.
2. Approach
Accounting is more concerned with accurate reporting of past events as well as adherence to rules and regulations. It is backward-looking.
Whereas, finance is forward-looking. It is concerned with looking forward and expanding a pot of money or minimizing losses.
3. Roles and responsibilities
The roles and responsibilities of accounting involve bookkeeping, tracking of revenues and expenses, internal reporting, financial reporting, auditing, and risk management.
On the other hand, funding the business, obtaining capital (debt and equity), maximizing the firm’s Weighted Average Cost of Capital, pursuing the greatest risk-adjusted returns, corporate strategy, budgeting and forecasting, and mergers and acquisitions are all examples of corporate tasks and duties under finance.
4. Career options
Career options in accounting include forensic accounting, management accounting, public accounting, financial accounting, auditing, government accounting, etc.
Career options in finance include investment banking, corporate finance, equity research, risk management, quantitative analysis, etc.
5. Education
To be an accountant you need to have a BA in Accounting, Masters in Accounting, CA, CPA, ACCA, CIMA, CMA.
For finance educational qualifications involves Bachelors in Finance, Accountancy, Mathematics or Economics, MBA, CFA, FRM, PRM, CFP, etc
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Also Read: CMA Vs CPA: Key Differences
