Most often than not, the terms finance and accounting are often confused among people as they fall under the same category of business assets. But it is imperative to know the differences between the two, especially for university graduates to build a career in their favourite field. Stick to the end to know the difference between the two.
Anything involved in the management of money for an individual, firm or a large organization is called finance. There are vast career options in this field which includes wealth management, financial planning and analysis, investment banking and many more. Professionals working in these fields are responsible for ensuring the smooth flow of cash, with adequate funding for all basic amenities and cash maintenance in terms of crisis. It is basically the way of planning the distribution of capital which includes that of business assets. The employers of finance include:
- Insurance companies
- Research and operating companies like regular businesses
Management of the finances which includes recording, maintaining reports and report to a company, together collectively falls under the umbrella of accounting. The professionals working in this department generally work for individuals, corporations or a firm. The professionals working in this field maintain a ledger typically and ensure that the balances and the information entered by the finance department is correct. Accounting is basically the art of recording and reporting financial transactions. The accounting professionals make use of the Generally Accepted Accounting Principles (GAAP) to report the financial transactions. The employers of accounting include
- Accounting firms that are responsible for auditing large companies
- Personal tax filing firms
- Businesses and operating companies
Types of Finances
Types of Accounting
On the professional front, the career opportunity for both finance and accounting is pretty vast and depends on the student’s choice of interest. The difference between both fields solely depends on the ideal curiosity. In accounting, an employee has to work under the Chief Financial Officers in big companies. Initially, a job title like Tax manager, fund accountant, controller or financial reporting accountant can be assigned to the employee, and they have the freedom of working for a non-profit organization or the government. Daily activities include: tracking and reporting the flow of money to ensure compliance with best practices. Section 446 will become their best friend throughout their career.
However, in the finance department, there is quite a range of options when compared to the latter. Designations like financial analyst, investment banker, financial advisor, money manager or financial examiner can be assigned, with the freedom of working for the government or non-governmental bodies. With relevant experience in the fields, one can also take up entrepreneurship in the same field.
Finance is based on controlling the cash flow of an organization or firm, while accounting is maintaining records of the financial data. Both the fields provide equal career opportunities and are equally reliable for betterment.