Finance is an integral part of accounting because it provides a framework for understanding financial statements. Financial statements provide a snapshot of a company’s performance at a particular point in time. They show whether the company has made a profit or loss, how much profit or loss there was, and how much cash the company had available to spend.
Role with Financial Vs Accounting
Finance
- Banks (retail, commercial, and investment)
- Insurance companies
- Research companies
- Operating companies (regular businesses)
Accounting
- Public accounting firms (that audit large companies)
- Personal tax filing firm
- Operating companies (businesses)
Finance
Finance is the administration of money and investments for people, companies, and governments. Finance professionals work in careers equivalent to investment banking, wealth administration, and monetary planning and evaluation (FP&A). Whether or not these professionals work on behalf of people or companies, they’re accountable for guaranteeing that there’s sufficient funding (capital) for the wants of the state of affairs and that the funds are allotted as optimally as attainable. Their job is to create value by managing capital in a method that earns larger than anticipated risk-adjusted returns.
Accounting
Accounting is the recording, sustaining, and reporting of an organization’s monetary data. Accounting professionals work for people, in-house at companies, or on behalf of different companies at a public accounting agency (such because the Massive 4). These professionals are accountable for guaranteeing that every one monetary transactions are appropriately entered into the overall ledger, that account balances are appropriate, and that financial statements are correct.
Finance vs. Accounting Summary
Below is a summary of the main differences you should know of:
| Accounting | Finance | |
|---|---|---|
| Clients | Individuals, businesses, governments | Individuals, businesses, governments |
| Main Employers | Public accounting firms, corporations | Banks, corporations |
| Financial Statements | Responsible for preparing them | Responsible for analyzing them |
| View Point | Backward looking | Forward looking |
| Focus | Accuracy, reliability | Insights, analysis |
| Business Purpose | Communicating the financial position | Figuring out how to add value |
| Thought Process | Rules based | Analysis based |
| Attention to Detail | High | High |
| Designations | CPA | MBA, FMVA |
Types of Finance vs. Accounting
Below is a detailed comparison of the various types of each profession.
Finance
- Personal
- Corporate
- Public
- Behavioral
- Social
Accounting
- Financial
- Public
- Forensic
- Management
- Tax
- Audit
Personality Differences
One of the biggest differences in accounting vs. finance careers is the types of personalities that are drawn to each of them.
Finance
- Analytical
- Inquisitive
- High attention to detail
- Thinks about scenarios
- Concerned with adding value
- Business development skills
- Problem-solving
Accounting
- Accountable
- Detail-oriented
- Rules-based thinking
- Risk management
- Procedure-oriented
- Concerned with accuracy
