FINANCE AND ACCOUNTING
These are the terms generally associated with the financial book. Finance is the branch that describes the creation,management and study of wealth, investments, debit, banking, credit, assets and liabilities. Accounting deals with the record making of the financial transaction. It also refers to the process of summarizing, analyzing, and reporting these transactions. It is the key function any financial institution. In this article we are taking steps to clear the hazy lining between these two terms.
Definition Of Finance
Definition Of Finance
- The study that describes wealth management and creation, banking, credit, investments, assets. It is basically generation of money by any source, whether by investing in company, selling goods and services or liquidating assets.
- Financial management is also a course offered by reputed B-schools. It is one of the best courses offered under the MBA (PGDM).
- Finance can be divided into three distinct categories: public finance, corporate finance and personal finance.
Definition Of Accounting
Definition of Financial Accounting
Financial accounting is a process of reporting the varied amount of transaction from a financial organization or company.It is a process of accurately depicting the total transaction of the company to calculate the real financial position of the company.Real work of the financial accounting is to prepare the financial statements like :
- Balance sheet
2. Income statement
- Cash flow statement
Finance and accounting go side by side as for every financial transaction, there is accounting for keeping track of every expenditure. Finance (decision making) stands for money management and the money management accounting is the best predicting tool as it encapsulate the company’s total operating performance.
Some of the key differences among them are as follows:–
|Finance means to propose the future plans to act as the basis to run the company smoothly,
||Accounting shows the past financial information of a system
|Depends on accounting for action steps.
||It records the previous financial statements for delivery of financial information.
|Finance in other words, is related to management and decision making taking into account the data from an accounting system.
||Accounting is more of a review system which helps one to keep account of various expanses and incomes in a company or to an individual.
|Financing is a broader term and accounting is part of the financial system,
||Accounting is part of the financial system (a subset of the whole financial system )
|In simple words, finance focuses on future expenses.
||Accounting focuses on past expenses
Author's point of view
Author’s point of view
Finance and accounting are two terms which are related with the financial management of any institution,company or firm.Finance is a broader term which deals with the overall financial management of the institution.As mentioned above the study of finance describes the money creation, management, and investment.While accounting is a term which is related to financial record keeping of the transactions done by any financial institution.Both finance and accounting go hand in hand for any company .As accounting supplement the financial management of the company.Accounting is one term subset of finance.