Accounting vs. Finance

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Difference between Accounting and Finance

Accounting and finance may sound synonymous for laypeople, but there is a difference between the two. They both include numbers, calculations and the need for a mathematical eye. Financiers and accountants have an important role in daily lives in the modern civilization. They had influence on our world's development, looking for funds and giving financial advice for leaders. The misunderstanding comes from their relationship: accounting and finance are connected with one another. Success depends on their objectives: if they are achieved, money comes in. If not, problems begin. This short text is to help you differentiate the two.   


Connection to Each Other

Accounting is part of the finance world. It gives information about how a business operates using statistical data.  If you think about balance sheets, income declarations, then you have the result of the accounting. The connection begins when financial director analyzes the sheets, the income and loss, or as said, the business performance and future payments. Financiers have an advantage because they analyze the profitability of the business and make sure that profits are at a constant.  Accounting people merely just do the process of tracking and dividing the portions of money amongst specific areas.  Pretty much, they just count the money and assign the money to specific places. 

Funds and Decision

Finance and accounting see funds and make decisions differently. In accounting, when a sale is done, it is considered revenue, although payment was not collected. About the expenses: they are acknowledged at the time they incurred, not when payment is done. In contrary, finance sees revenues in the moment of receiving the cash and expenses are confirmed when payment is processed as cash outflow.  


The goal of accounting is to collect the financial information about the running business, a constantly refreshed and interpreted data, which is interpreted and presented to have an image about the company's inclination. At the same time, the financial sector works on a strategy for a proper management, financial strategy and control of business. Practically, it picks up the ball, where accounting left it. Finance people look for a greater return on investments and they attempt to utilize a plan that is to achieve this. 

Similarities and Differences

As we could see, the misunderstanding has its roots confusing accounting with financing. Both play an important role in economic development, we can say that if you choose either field for work, you have chosen well, because both perform services the economy will always need.

As seen, finance and accounting show some similarities and differences such as;

  • They are connected one to another, because both has a bit to do with income declarations, balance sheets and love for mathematical accuracy
  • They differ in how they see funds and how they make decisions. An accountant acknowledges a revenue although not collected, a financier acknowledges when the cash comes in
  • When accountancy stops, finance begins. An accountant collects data and presents it, a finance thinks about how to use and increase funds 

Accounting and Finance Video


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