Finance and Accounting control the business’s money. But Did You Know both are used for different objectives?
If not, then here we will give you the knowledge of finance vs accounting in detail.
Finance and accounting both are essential parts of a business enterprise. Both Finance and accounting are interrelated to each other. Finance has a broader scope, while accounting is a part of it.
So, stay continued to know the main difference between both accounting and finance.
Let’s begin our discussion with what is Finance and accounting?
Finance means managing a large amount of money by the government or big organizations. It is a broad term associated with borrowing, investing, budgeting, lending, forecasting, and saving.
- Boost Sales
- Increase average order value.
- Improve cash flow.
- Attract new customers.
- Earn repeat business.
- Central Banks.
- Retail and Commercial Banks.
- Internet Banks.
- Credit Unions.
- Savings and Loan Associations.
- Investment Banks and Companies.
- Brokerage Firms.
- Insurance Companies.
Accounting refers to the recording of financial transactions. It involves summarizing, analyzing, interpreting the result, and communicating the information to the decision-makers.
- Maintenance of business records.
- Preparation of financial statements.
- Comparison of results.
- Decision making.
- Evidence in legal matters.
- Provides information to related parties.
- Helps in taxation matters.
- Valuation of business.
- Deloitte – $50.2 billion (Deloitte Info)
- PwC – $43 billion (PwC Info)
- EY – $40 billion (EY Info)
- KPMG – $29.75 billion (KPMG Info)
- Accounting Firm Information (BDO) – $10.3 billion
- RSM $6.3 billion.
- Grant Thornton – $5.76 billion.
- Nexia International – $4.5 billion.
Let’s Take A Glimpse At Finance VS Accounting-
|Concept||Finance is related to the management of money. It makes investments for individuals, organizations, and governments. It creates value by managing capital that leads to generating higher returns.||Accounting is a vital function of any organization. The reports generated through accounting helps management to make informed business decisions. Streams of accounting help the organization to run smoothly and efficiently.|
|Scope||Finance has a wide scope.||Accounting is Narrow in scope.|
|Functions||Finance maintains coordination in banks, application and sourcing of funds, preparation of budgets, Management Information System (MIS), and Executive Information System (EIS) reporting.||Accounting Functions involve recording financial transactions, evaluating Prime books, and generating financial statements.|
|Fields/Branches||Private Finance, Corporate Finance, Public Finance, etc.||Management Accounting, Cost accounting, Financial Accounting, Tax Accounting, Environment Accounting, Forensic accounting, etc|
|Objective||The finance objective is to analyze funds of an organization’s business and capital market for formulating plans and strategies.||The objective is to provide information regarding the company’s solvency status to the financial statement readers.|
|Profession||Financial Analyst, Investment Broker, Financial Advisors, etc.||Chartered Accountant, Auditors, Tax Consultants, etc.|
|Techniques||The essential techniques are Capital Budgeting, Working Capital Management, Ratio Analysis, etc.||The essential techniques are Cash flow statement, Income statement, and Balance Sheet, etc.|
- Accounting is considered a more tough subject as compared to Finance.
- Finance only requires knowledge of Economics and Accounting.
- Accounting pertains to strict set principles governing it.
- It depends on your overall skills and interest.
- Finance is challenging for those who are not good at maths and do not have many financial skills.
- Accounting is challenging for those who find it hard to understand accounting concepts and don’t know how to work on transactions.
According to research, those who graduated in finance tend to have slightly higher incomes than those with accounting degrees.
From the above graph, in 2019, the starting salary for finance graduates was $57,750, whereas starting salary for accounting graduates was $57,250.
Most students seem confused about the concept of finance vs accounting. In this blog, we have explained the basic difference between finance and accounting. It will be helpful if you are a student or want to choose a career in one of them.
Both play a vital role to run the organization. Finance is a broad concept, and accounting is part of it. We hope that our blog will become very helpful for you and it will also clear all your doubts regarding the difference between finance and accounting.