Accounting vs Finance

Accounting vs Finance | Accounting Smarts
Charles Hall

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Charles Hall

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June 10, 2022

Accounting vs finance – two of the most prevalent options for university graduates, but what's the difference, and which career direction is right for you?

Accounting vs finance – two of the most prevalent options for university graduates, but what's the difference, and which career direction is right for you?

The major distinction between the two fields is that individuals in finance are responsible for planning and directing an organization's financial activities, whereas those in accounting are responsible for recording and reporting such transactions.

It's critical to have a working knowledge of both disciplines when evaluating your company's financial viability and making strategic financial decisions. If you enjoy dealing with numbers, pursuing a career in accounting or finance could be an excellent choice for you since each field offers a gratifying professional path for different reasons. However, because the subjects overlap, you may be unclear when it comes to which degree to pursue.

There are evident disparities between the two subjects, which are discussed below. The information provided comes from our experts who possess in-depth knowledge about both fields. So, without further ado, let's start with our accounting Vs finance comparison.

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Accounting Vs Finance

Accounting mainly focuses on the day-to-day movement of money in and out of a firm or institution, whereas finance is a broader word covering asset and liability management as well as future growth planning.

To put it another way, accounting is the process of organizing and managing financial data, whereas finance is the process of managing revenue and expenses. Finance is the more general subject of the two and involves the management of money and investments, whilst accounting is focused on its application. Accounting keeps track of a company's money, and it entails keeping meticulous records and analyzing financial activities.

Finance may be for you if you wish to have high-level control over a company's strategy. On the other hand, you will probably find accounting more interesting if you want to look at a company's books in detail. Accounting is typically stated to look back at a company's previous financial activities, whereas finance looks ahead to plan future asset acquisitions.

Accounting is primarily concerned with accurate reporting of what has already occurred as well as adherence to rules and regulations. Looking ahead and building a pot of money or minimizing losses is what finance is all about. If you prefer to think in terms of a longer time horizon, finance may be a better fit for you than accounting.

Should You Choose Accounting or Finance?

Accounting

Accounting is the process of recognizing, recording, and conveying a company's financial outcomes. Accounting is critical for any corporation since it measures operations, compiles data into reports, and conveys the outcomes to decision-makers.

There are various areas of specialization in accounting:

Financial Accounting

The production of financial statements, such as cash flow statements, balance sheets, and income statements, are part of financial accounting. External decision-makers, such as creditors, investors, and taxing authorities, use this data.

Managerial Accounting

This category uses the same data as financial accounting to make choices about corporate operations, but it is used by internal stakeholders. Financial analytical tools, budgeting, and forecasting are examples of managerial accounting.

Cost Accounting

Cost accounting entails calculating the costs of manufacturing a product and assisting businesses in selecting whether or not to produce the product and how much it should cost.

You can expect to study accounting theory, tax law, corporate law, and accounting practices and ethics if you wish to study accounting.

Career Direction for Accounting Grads

  • Tax accountant
  • Technical accounting manager
  • Treasurer
  • Controller
  • Accounts payable clerk
  • Accounts receivable clerk
  • Cost accounting manager
  • Bookkeeper
  • Auditor
  • Treasurer

Some people consider accounts as the language of business, while others consider it as a subset or branch of finance. The Accounting Foundation explains that accounting professionals employ a set of rules and principles called the Generally Accepted Accounting Principles (GAAP) to track and report on a company's financial activities and manage the tax responsibilities, cash flow, and general ledger of the company.

They usually deal with invoicing, bank reconciliations, journal entries, and other processes that are part of a company's day-to-day operations. In addition, they may report earnings, audit internal activities, manage debt, analyze profitability, and prepare quarterly and annual financial reports.

Finance

Finance encompasses borrowing, investing, saving, lending, predicting, and budgeting. It is the process of managing money and obtaining needed funds. Microeconomic and macroeconomic theory underpin financial notions and principles, such as intrinsic value and the time value of money. Finance can be divided into three broad categories:

Individual Finance

Individual financial planning is a part of personal finance. Long-term financial management strategies, such as mortgages, acquiring financial products, banking, and retirement planning, are examples of this.

Corporate Finance

This refers to the financial activities that go into running a business, such as investment strategy and budgeting.

Government Finance

Taxation, expenditure, budgeting, and other policies relating to how the government allocates resources are all part of public (government) finance.

If you major in finance, you'll probably spend some time in class learning about macroeconomics and international finance, as well as corporate finance and financial engineering.

Career Direction for Finance Grads

Finance is a broad field and has many career prospects, including:

  • Financial analyst
  • Financial advisor
  • Financial planner or manager
  • Financial broker
  • Investment banker

According to research, finance professionals frequently interact with external parties, such as suppliers, stockholders, investment services and firms, banks, and government agencies.

With an emphasis on profitability, finance experts frequently examine, regulate, or govern an organization's monetary resources, investments, and assets. They may also be involved in the early stages of expansions and acquisitions. They frequently play a significant role in assisting an organization in responding to market trends to either benefit from upturns or withstand downturns.

Skills Required for a Career in Accounting

To be a successful accounting professional, you will need a combination of soft skills, broad business knowledge, and accounting proficiency similar to pursuing a career in finance. According to the Journal of Accountancy, accountants with hard skills in technology and software systems, such as business intelligence tools, Microsoft Visual Basic, SQL, ERP Experience, and Excel, are in high demand. Plus, soft skills, such as efficient customer service, leadership quality, and good communication, are also important for accountants.

Skills Required for a Career in Finance

In addition, commercial acumen, analytical understanding, financial reporting, problem-solving skills, communication ability, and interpersonal abilities are cited as key qualities for a career in finance. However, technical knowledge and soft skills are equally important for finance professionals, according to Robert Half.

Accounting and finance are both lucrative areas with promising job prospects, and they both require handling money and financial data. Understanding the distinction between accounting and finance can aid students in determining which degree will best suit their interests and career objectives.

Charles Hall

Charles Hall

Charles has spent 25 plus years in the world of accounting and business. His experience includes working as a CPA/Auditor international accounting firms. He has worked as a controller and as a COO for small to medium sized companies.

Learn more about Charles Hall