Finance Vs Accounts

Finance is often used as a synonym for accounting. However, there are some critical differences between the two fields. A finance professional typically focuses more on investments and money management, while an accountant usually works with business transactions and tax-related responsibilities. In simple words, where the work of accounts ends–The Balance Sheets, the story of Finance begins. Because of this, finance is considered a forward-looking process, whereas accounts is a backward-looking process. 

We'll be going over the basics of finance versus accounting so you can better understand what each field entails and help you make an informed decision about which path to take.

Finance is a highly specialized field that focuses on investments and money management. In contrast, accountants focus on smaller transactions and recordkeeping. Join us to learn more about the differences between finance and accounting as we go into the basics of each.

 

Finance

 

Have you ever wondered how financial institutions like banks and the Stock market make money? If you have ever been to a financial institution, you can hear the terms like Risks, Returns, Time value, and Investments; all of this comes under finance. Finance is not limited to big cooperations the individuals can also benefit from it. The investment decisions Like whether to Buy or Rent, the Future value of the investments and maintaining good portfolios are some of the applications and uses of finance. It can be defined as “Finance is managing money and investments for individuals, corporations, and governments”. Finance professionals work in careers such as investment banking, wealth management, and financial planning and analysis (FP&A). Whether these professionals work on behalf of individuals or businesses, they are responsible for ensuring adequate funding (capital) for the situation's needs and that the funds are allocated as optimally as possible. Their job is to create value by managing capital in a way that earns higher than expected risk-adjusted returns.

 

Accounts

The methods of account vary according to the people, nations, and organizations, but the concept remains the same. Despite the core definitions, I would like to define accounts in three phases: truth and fair, Consistency and Accurate. If your reports fell to meet these three criteria, then it’s better to change your accountant. Typically, an Account is a record in an accounting system that tracks the financial activities of a specific asset, liability, equity, revenue, or expense. These records increase and decrease as business events occur throughout the accounting period–simple right?
Similarly, Accounting is the recording, maintaining, and reporting a company’s financial records. Accounting professionals work for individuals, in-house at corporations, or on behalf of other businesses at a public accounting firm (such as the Big Four). These professionals are responsible for ensuring that all financial transactions are correctly entered into the general ledger, that account balances are correct, and that financial statements are accurate.

 

Key Differences between the Finance and Account.

 

Keys	Account	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
Viewpoint	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,CFA

Key Similarities between Finance & Account.

·       Both are parts of the total accounting information system.

·       Economic events are dealt in the system of accounts.

·       The economic events are qualified only in terms of rupees.

·       Both are concerned with financial statements, revenues, expenses, assets, liabilities, and cash flows.

·       Both the system of accounts is accumulating and classifying the accounting information for the preparation of financial statements.

·       Some database is used for preparing financial statements and reports under both system of accounts.

·       Both are determining and measurement of costs for different accounting periods and even for different departments and sections.

·       The same accounting principles and concepts are used in both system of accounts for the purpose of cost accumulation and cost allocation.