The difference between finance and accounting

You may hear the words "accounting" and "finance" and think they mean the same thing, however, there is a difference between the two and understanding the difference helps your company grow and ensure it has the resources to handle that growth.

This article will analyze the key similarities and differences between finance versus accounting jobs, and for college graduates, these are two of the most popular options, and each offers a rewarding career path for unique reasons, so please explore this article to plan your career accordingly.

What is the difference between "Accounting" and "Finance"?

The procedures of both the finance department and the accounting department focus on the company's financial statements and everything that contributes to it. In general, the difference is that accounting focuses on the past while finance focuses on the future.

Accounting is the art of keeping a record of events and business transactions in a systematic manner, and helps in determining the financial position and profitability of the company at the end of the financial year. It is not exactly the same as finance. Technically, finance is the part of economics that is concerned with resource allocation and money management, while accounting is a sub-field of finance.

The two differ in the sense that accounting is about recording the flow of money in and out of the company. While finance relates to how an individual or company manages its assets and liabilities.

What is accounting?

Accounting refers to a process that contains a series of steps related to keeping track of business activities of a financial nature, after that, it presents itself to its users, in this, we keep a historical record of financial transactions, after that, we categorize, summarize, analyze and interpret and then after that, the results of these financial transactions are communicated to users.

As a language it acts as a means of communication. Accounting is the language of business that conveys financial information to its users, hence, the primary objective of accounting is to determine the profit or loss, for a certain period, and this allows users to know the financial condition of the company on the specified date.

Accounting Objectives

Accounting aims to:

Systematically record all cash transactions

Determine the outcome of the recorded transaction

Determining the financial position of the business

Providing information for users to make a sound judgment

Learn about the company's solvency status

Accounting Jobs

Measurement: It measures the institution's performance in the past, as well as reveals its financial position in the current scenario.

Forecasting: With the help of past information, one can predict the performance and future trends.

Decision making: In order to make sound and rational decisions, accounting provides useful data to all users.

What is finance?

Finance is an important aspect of any individual or organization, in business, it is a crucial job because any business needs to earn money to keep working, that is why it is considered a specialized field that requires trained people, and there are many professional courses in finance offered by business schools and online educational portals .

The finance team in the company has qualified people who perform various functions such as accountants and analysts, among others, their main job is to ensure that the company is operating profitably and that profits and costs are balanced.

The company's financial expert is responsible for overseeing many aspects of financial planning such as cash flow, capital expenditures, income, investments, profitability, savings, assets, etc. She links the company's goals and strategic vision with financial figures.

Financial importance

Lack of proper financial planning can harm the business and its stakeholders, and can lead to a shortage of cash required for day-to-day operations such as marketing or production.

The lack of financial planning can also result in the inability to raise capital to expand your business or fund a new project in your current business, in fact, all day-to-day operations in the company will come to a halt if the financial planning is not done properly