Difference Between Accounting and Finance
What is accounting?
Accounting or accountancy means the measurement, processing and communication of financial and non-financial information about financial institutions such as businesses and corporations. Accounting, known as the “business language”, measures the financial results of a company and communicates this information to a variety of customers, including investors, creditors, management and regulators. Accounting practitioners are called accountants.
Accounting can be sub divided into many different areas, including external auditing, financial accounting, management accounting, tax accounting and cost accounting. These information systems are designed to support accounting tasks and other related activities.
Financial accounting focuses on exposure the company’s financial information, including the groundwork of financial statements, to external users of information, such as investors, regulators and suppliers; And Management Accounting focuses on the capacity, examination and reporting of information for inside use by management.
Recording of financial transactions so that financial statements can be presented in financial statements, known as bookkeeping, of which double entry bookkeeping is the most common system.
Accounting has different subfields or subject area that including:
- Financial accounting
Accounting information systems
Accounting required on different stages like:
- Professional bodies
- Accounting firms
What is Finance?
Finance is about studying money and how to use it. Specifically, it deals with questions about how much money an individual, company or government needs – called capital in the context of the company – and how they spend or invest that money.
Core economic theories can be largely divided into the following categories: Financial Economics, Mathematical Finance and Valuation.
Finance is about the whole “system” that is, the financial promoters that allow the flow of cash between and within these areas, through investments and some other financial instruments. This “flow” has been facilitated by the financial services sector.
A major focus of finance is investment management – money management for individuals, and asset management for corporations – and finance includes the affiliate operations of securities trading & stock broking, investment banking and financial engineering and risk management.
Areas of finance
- Personal finance
- Corporate finance
- Public finance
- Financial economics
- Financial mathematics
- Experimental finance
- Behavioral finance
Accounting VS finance
Skills differecne between accounting and finance
- Detail and procedure oriented
- Well informed of appropriate statutes and accounting principles
- conventional and modest in recording predictable profits
- Rule based thinking
- Strong quantitative and computation skills
- Research oriented and analytical inclination
- Well informed of current market and industry situations
- Risk taking
- Out of the box thinking
- Result and profit driven
- Balance sheet
- Profit and loss accounts
- Cash flow statements
- Depreciation schedules
- Cost allocations statements etc.
• Capital budgeting
• Working capital management
• Investment policy management
• ROI computations
• Forecasting schedules
• Leverage analysis etc