Difference Between Finance and Accounting

Difference Between Finance and Accounting
Difference Between Finance and Accounting

Accounting is the art of systematically keeping records of business events and transactions, to determine the financial position and profitability of the company at the end of the financial year. It’s not like finance. Technically, finance is the part of economics that deals with the allocation and management of resources. To better understand, first you need to clarify the Difference Between Finance and Accounting.

Accounting focuses on issues related to finance, finance, investment, credit, banking, and markets, to provide users with financial information about the organization for rational decision-making. Many people think that accounting and finance are the same things but they are two different disciplines. This article explains the concepts and differences between accounting and finance.

Comparison Chart.

The base for comparison between Accounting and Financing:

InfoAccounting Financing
MeaningAccounting is the art of recording and reporting the financial transactions of a business.Finance is the science of managing business funds.
BranchFinancial Accounting, Cost Accounting, Tax Accounting, Management Accounting, etc.Private Finance, Corporate Finance, Public Finance, etc.
CareerAccounting professionals can be accountants, auditors, tax consultants, etc.Finance professionals can be investment bankers, financial analysts, financial consultants, etc
CategoryAccounting is a part of finance.Finance is not part of accounting.
PurposeTo provide information about the solvency status of the company to the readers of financial statements.Studying capital markets and business funding for future strategy formulation.
ToolsImportant tools are the Balance sheet, Income statements, cash flow statements, etc.Risk analysis, Capital budgeting, Ratio analysis, Leveraging, Working capital management, etc.
Comparison Table

Definition of Accounting:

Accounting is the complete process of identifying, recording, classifying, summarizing, reporting, interpreting, and analyzing financial information. It is an industry of regularly recording transactions to keep track of financial statements based on Accounting Standards (AS). With the help of an entity’s financial statements, tax audits and internal audits are carried out at the end of the financial year.

These financial statements are readable to users after auditing, who can see the performance and position of the business over a while. Users of financial statements include all the stakeholders like creditors, debtors, creditors, suppliers, investors, shareholders, employees, etc.

Definition of Financing.

Finance is the science of effectively acquiring and allocating funds (ie spending or investing). It is a broad term, which studies money and capital markets as well as the provision and management of funds by businesses. The main side of money is “the value of money” the value of money changes over time.

It helps in analyzing any budget to choose the best investment plan, which reduces the risk factor for a firm.


Both accounting and finance are a part of economics. Both these entities are dependent on each other as accounting is a part of finance and finance is dependent on accounting. The financial analysis is done with the help of the financial statements submitted by the auditor. In other words, both are very closely interconnected, or we can say that the end of accounting is the beginning of finance.

Difference Between Finance and Accounting:

While finance primarily focuses on planning and managing an organization’s financial transactions, accounting focuses on the recording and reporting of those transactions.


Simply put, accounting is the management of organizational and financial information or data, while finance is the management of money in its entirety and forms.

The game subjects (finance, accounting, management, and economics) come from their important role in the world of business, especially the first two letters of the acronym: accounting and finance.

Moreover, the discipline has a relatively narrow focus, while finance, broadly, covers a level of privilege in the worlds of business, economics, and banking.

For specialized accounting careers, an accounting degree will provide a foundation as well as other related careers. Accounting careers typically involve analyzing and using financial data to assess the financial position of a business.

This can involve anything from basic bookkeeping to managing income statements and balance sheets. They often have a large focus on records and present reports. Involved in the creation and analysis of these records. And now often includes planning, controlling, decision-making, leadership, accountability, and more.

What does an Accounting Degree Cover?

The degree in accounting will provide a foundation for specialized careers in the discipline as well as other related careers. It involves the analysis and use of financial data to assess the financial position of a business. It cuts out basic bookkeeping for balance sheet and income statement management.

Furthermore, it usually has a greater focus on records and current reports, requires the creation and analysis of these records, and now often includes planning, control, decision-making, leadership, accountability, and more.

Although it is fair enough to pursue an accounting career with just a bachelor’s degree, postgraduate study is an option for those who want more specialized knowledge of a particular field.

To become a chartered accountant, you need to acquire further professional qualifications for the country in which you wish to work. Depending on the recruiting business, these professional qualifications can sometimes be acquired on the job, although sometimes with a subsidy from your employer.

Specialization Area in Accounting?

The discipline offers various specializations for students. Thus, those who study it can often specialize in careers such as auditing, taxation, risk assessment, international accounting, and management accounting.

Forensic accounting is another possible option. Allows students to immerse themselves in real-life case studies to gain an understanding of how accounting processes are used in legal proceedings.

Such cases may relate to fraud, electronic crime, insurance claims, bankruptcy, and corporate policy. As with the finance degree, those who want to study accounting with more specialization and individual research can take a further master’s degree in MRES or Ph.D.

Career Prospects in Accounting:

Although many people consider accounting to be a subset of finance, others refer to it as the “language of business”. In the business world, those who work as accountants use a standard set of rules and principles known as Generally Accepted Accounting Principles (GAAP).

It is used to track and report a business’s financial transactions and often manages general ledgers, cash flow, and tax obligations.

Accountants generally deal with journal entries, bank reconciliations, invoicing, and similar processes that relate to the day-to-day operations of a business. They may prepare quarterly and annual financial reports, analyze profitability, manage debt, audit internal transactions, and report earnings.

Common Syllabus Content for Accounting:

  • Auditing
  • Budget analysis.
  • Business strategy.
  • Financial Accounting.
  • Financial details.
  • Forensic Accounting.
  • Information systems.
  • International Accounts.
  • Macro / Microeconomics.
  • Management Accounting.
  • Professional standards and ethics.
  • Quantitative analysis.
  • Tax accounting.

Are There More Qualifications Needed to Become an Accountant?

To become a qualified accountant you need to acquire a professional accountancy qualification from a globally recognized association such as the Chartered Certified Accountants (ACCA) or the Chartered Institute of Management Accountants (CIMA) certification. If you are studying at the postgraduate level, depending on the specific credits and modules you take you may find that you are exempt from taking this external qualification.

The Career Potential for Accounting:

  • Accountants (Trainee, Public, Professional, and Certified).
  • Insurance carrier.
  • Auditor.
  • The accountant.
  • Accounts Receivable Clerk.
  • Accounts Payable Clerk.
  • Budget Analyst.
  • Credit Controller.
  • Financial Reporting Accountant.
  • Cost Accounting Manager.
  • Controller.
  • Treasurer.
  • Technical Accounting Manager.
  • Tax accountant.
  • Financial Advisor.
  • Forensic Accountant.
  • Financial examiner.
  • Payroll Administrator.
  • Risk Assessor.


On the other hand, finance is a great starting point for careers in financial services across the business, banking, and consulting sectors. Finance careers are also likely to be slightly more lucrative than most accountancy, according to US salary data compiled by Payscale.

This is because finance careers only focus on managing the current and future figures of a business or organization.

The aforementioned means that finance careers often have the added responsibility of forecasting and analyzing profit and growth potential. Assessing financial assets, using statistics and reports, and searching externally for future funding options.

What does a Finance Degree Cover?

A finance degree provides a significant starting point for careers in financial services, business, banking, and consulting. This is because finance careers usually focus on managing the current and future figures of a business or organization. As opposed to simply recording past and present income and expenses.

Furthermore, this means that finance often has the added responsibility of forecasting and analyzing profitability and growth. Financial asset evaluations, utilization statistics and reports, and searching externally for future funding options.

What are the Specialization Areas in Finance?

Common specialties for those who study finance at a degree level include corporate finance, financial valuation, behavioral finance, and derivatives.

It also includes econometrics of capital markets, investment banking, financial modeling, and quantitative finance.

This includes investment management, financial control, financial reporting, and some aspects of accounting.

These specialties, although taught within an undergraduate-level program, are sometimes conducted as entire courses in their own right at the postgraduate level. Other possible programs include financial management, financial engineering, international finance, banking, risk, and financial planning.

Career Prospects in Finance:

Finance is a broad field involving money management that encompasses anything from corporate finance to personal, financial planning.

Financial professionals evaluate, control, or manage an organization’s financial assets, investments, and assets, often with a focus on generating profits.

Also, they may be involved in the early stages of expansion and acquisition. Time plays a key role in helping an organization respond to market trends. Either to earn upturns or to help the company withstand downturns.

People who work in finance often deal with others outside the organization, such as government agencies, banks, investment firms and services, stockholders, and suppliers.

Career Prospects Among Finance Majors Include:

  • Investment moneylenders.
  • Financial broker.
  • Financial manager or planner.
  • Financial advisor.
  • Financial Analyst.

Common Course Contents for Finance:

  • Advanced Derivatives.
  • Financial engineering.
  • Asset Markets.
  • Financial planning.
  • behavioral meaning.
  • Corporate finance.
  • Economics / Econometrics.
  • Financial Mathematics.
  • International Economics.
  • Financial management.
  • Risk management.
  • Financial Accounting.
  • Venture capital.

The Career Potential for Finance:

  • Commercial banker.
  • Financial Manager.
  • Financial trader.
  • Insurance Officer.
  • Financial Advisor.
  • Investment moneylenders.
  • Quant expert.
  • Hedge fund manager.

What are the Entry Requirements for Degrees in Accounting and Finance?

If you are interested in studying finance or accounting at the undergraduate level, there do not need to have relevant work experience. Also, not having an academic qualification, especially in accounting or finance is not a barrier.

However, applicants need to prove their interest in accounting and finance as well as their mathematical skills. This can be done with high school and A-level qualifications in related STEM and FAEM subjects. Subjects such as business, economics, computer science, mathematics, and other sciences and technologies. Extracurricular activities such as math club membership can also be taken into consideration.

If you are applying for a postgraduate accounting or finance program, you are looking to complete a related graduate program and/or have several years of relevant professional work experience.

But this is not always necessary. Students who can demonstrate their quantitative and analytical skills through content covered in their previous degree or through tests such as the GMAT or GRE may also be recognized.

Why Accounting or Finance at the Graduate Level?

The undergraduate level has become extremely beneficial to overcome due to the high demand for graduates who are ready to keep pace with continuous development, new processes, changing markets, and emerging technologies.

Those who study accounting or finance at the postgraduate level often gain a keen understanding of the theories and models that underlie surface-level processes. This can make them more apt to adapt to any environment and make solid business decisions at the management level.

Accounting vs Finance.

At the graduate level, it is possible to take a joint accounting and finance degree, to gain a broad knowledge of both careers. However, those who study further can practice in one or the other to gain advanced skills in a particular field.

Accounting focuses on the administration of financial reports and records throughout the day-to-day business world. While finance uses this same data to report future developments and analyze exits towards an organization’s financial planning.

In other words, finance degree students will likely be more interested in financial control and strategy. Accounting degree students will focus more on the professional principles and procedures used to manage, rather than influence, numbers.

Finance vs. Accounting: Salary Expectations and Job Outlook

According to an analysis of the highest paying business majors for US graduates, NACE (National Association of Colleges and Employers) summarizes that the average starting salary for accounting majors in the US is US$57,250. Major Finance starts jobs at a slightly higher salary of $57,250.

Furthermore, at the postgraduate level, this gap is wider. Finance graduates earn an average of US$68,550 compared to accounting graduates.

An average Accounting major earns starting salary of $57,250. Although this suggests that the money is a more lucrative route, if you decide to earn a professional accounting qualification on top of your academic degree, you can earn up to $68,000 as a certified accountant.

Key skills to Acquire: Accounting vs. Finance

  • Quantitative specialized knowledge of various accounting techniques and topics.
  • Awareness of GAAP (Generally Accepted Accounting Principles)
  • Knowledge of accounting controls
  • Strong understanding of the business industry
  • Communication skills
  • Ability to make business decisions independently
  • Analytical skills

Professional Accreditation: Accounting vs. Finance

  • CPA (Certified Public Accountant-US)
  • ACA / CA (Chartered Accountant – Commonwealth and the United Kingdom)
  • ACCA (Chartered Certified Accountant-UK)
  • CTP (Certified Treasury Professional)
  • CPRM (Certified Professional Risk Manager)
  • CF (Corporate Finance Qualification)
  • CQFF (Certificate of Quantitative Finance)



Accounting and finance are so intertwined in every aspect of business that without them the business cannot survive for long. If you want to know the importance of this, just imagine what an organization would be like if they both didn’t exist. There will be no records of transactions, no profit determination, no existence on which to value exploration and investment, capital management is unimaginable, risk factors will increase, comparisons cannot be made, cash analysis and budgeting will not be possible, etc.

If one wants to pursue a career in accounting and finance, first of all, the career choice is great because of the various opportunities in banking, advertising, insurance, marketing, management, etc. And to do that, he needs to get a degree in accounting and finance.

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