While the two are obviously related, there is definitely a difference between accounting and finance. Actually, and perhaps more accurately, accounting is one of the components that make up finance, but to understand this more clearly lets simply define each of these terms separately to see how they come together.
ACCOUNTING: The methodical, precise recording, reporting, and assessment of the financial deals and transactions of a business.
FINANCE: The efficient and productive management of assets and liabilities based on existing information.
Now, in terms of business, in order to have your finances in order, you need to have a quality accounting department. Proper finance relies on accurate accounting, to put it bluntly.
In terms of business, the accounting department produces information regarding the daily operations of the business, based on past performance analysis. This includes:
Financial declarations like balance sheets.
Income declarations like profit and loss ledgers.
Positional declarations like changes in financial sources and uses.
The information contained within these declarations and reports aids the directors in the finance department in analyzing past performance in order to determine a strategy for the future.
In terms of business, the finance department, then, is responsible for managing the actual handling of money in regards to the analysis. This department takes all of the data collected and analyzed by the accounting department based on past actions and results and formulates a direction for action in the future.
Another way to look at it is: Accounting looks at the past while finance looks to the future.
Accounting is basically the system of making records, verifications and reporting of value of assets, liabilities, expenses and income in the accounts books. The transactions are posted chronologically to record changes in value of assets and liabilities.
On the other hand, Finance refers to the time, money and risk associated with a specific business. Finance is different because it works on the accounting information to predict future trends or to make decisions about the future.
Accounting / Accounts
Accounting is the art of recording classifying and summarizing the books of account. Preparation of financial statements is also one of the jobs of Accounting.
Where as finance deals with the managing of funds that how much to invest where to invest in short to get maximum return from your investment and fulfilling the needs of funds that from where to borrow how much to borrow in short borrowing at minimum rates.
Accounting relates to booking of the historical transactions of an organisation and it leads to preparation of Financial Status of the company stating what assets and what liabilities are held by the entity as on the day when relevant period (say a year) ends, i.e Balance Sheet. The profitability is also worked out for that period. The transactions are entered on routine basis during any year and thus there is a need to arrange for the Finance for concluding those transactions. Financial status is concluded from the Balance sheet, Profit & Loss A/c. Since business has to rely upon outside financial resources, these outside agencies depend upon the B/S and P&L of the organization to draw their conclusions for deciding whether it is viable to lend or not. The person engaged by the organization for liaison with the lenders is supposed to have complete knowledge about B/S and P&L and helps in making it draw favorable conclusions regarding financial status of the organization before outsiders. Thus, this way he arranges finance and thus known as a person looking after finance of the company. Cost saving is another function which is looked after by this person. Small saving in per unit cost of the Raw material may lead to saving of millions.
Finance means the study of different ways in which individuals, businesses and organisations raise and allocate monetary resources and use the same for business purposes keeping the risks involved in mind.
The activity of finance is the application of a set of techniques that individuals and organisations use to manage their financial affairs, particularly the differences between income and expenditure and the risks of their investments. There are different categories in which finance could be distributed, like personal finance, public finance and corporate finance.
Accounting on the other hand is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocation decisions. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. There are different categories in which accounting can be distributed, like cost accounting, financial accounting, internal and external accounting, etc.
Accountants are 'bean counters', they are given data and use it to compile and arrange financial documents (very basic once you know how).
Finance is the use of these documents plus an array of other different techniques to analyze a companies status financially, . The difference between the two is people who work in finance can also work as accountants as they deal with documents produced by accountants, whereas a lot of accountants need to do extra informal or formal study to understand the in depth and technical analytical aspects of a financial job role. Financial roles are more of a controlling role whereby the use of the accountants produced information allows them to make conclusions and either recommend or instigate appropriate changes or actions.
Usually the CFO of a company needs to be well informed of both areas. In terms of which role pays more, it is very subjective on the particular role, but generally pay is around the same in relative roles.
Both accounting and finance is extremely important to the success of a company. A company with excellent management but poor financial support (accounting and finance) will eventually fold.
Finance is a measurement of value for your investments, which has a lot of theory and speculation. Accounting is balancing your debits and credits, through your expenditures and assets. Accounting thinks within a box while finance thinks outside the box. Finance uses models to forecast and predict future investments and which is then accounted for through accounting.
Ok now that helps me too but I just wonder since I could be up for either on I know this sounds bad but which one can you make more money? And can anyone answer what takes more work I'm always up for a challenge but I wonder what all it takes to do either on