Similarities between finance and accounting
Following are the few fundamental similarities between finance and accounting:
- Finance and accounting are both exponentially accepted domains. Companies give importance to both finance and accounting to have sound and rational knowledge in the area of certain kind of certification. The certified public account designation, generally abbreviated as CPA, is considered the gold standard for an accountant who is aspirant to pursue financial accounting. Then, there is another form that is called management accountant designation, abbreviated as CMA. It focuses on the cost management, decision analysis and the overall performance that helps to evaluate the managerial account practices.
- Both the financial manager and accounts manager put the information of accounts in a report format for the executives.
- Other than this, both the managers provide accounting information to the potential investors, lenders, creditors, clients and users.
- Finance and account manager focus on the needs and requirements of outside stakeholder and also focus on the needs of internal users.
Differences between finance and accounting
Following are the few fundamental differences between finance and accounting.
|1.||Finance is the science of planning the distribution of a business’ assets.||Accounting is the art of the recording and reporting financial transactions.
|2.||The fundamental principles of the finance management are the limiting the debt to income-producing assets, understanding and well calculating the risks, risk-return tradeoff, maximizing the employment benefits, Non-diversification for the investment and organizing the finances.||The fundamental principles in accounting are the full disclosure principle, economic entity assumption, monetary unit assumption, cost principle, revenue recognition principle, going concern assumption and conservatism.|
|3.||A finance manager controls and deals in financial decisions of a company. A finance manager is involved in Financial Planning and Analysis.||An accountant manages a team of accountants within the accounting department and directly reports to the Controller.|
|4.||Finance deals with the prospects of future and it is dealt with risk and uncertainty.||Accounting is a mechanism for the delivery of financial information. It rotates around the recording of transactions and preparation of all the financial statements.|
|5.||In finance, the system of funds determination is entirely based on cash flows. All the revenues are acknowledged during the actual receipt in cash as in cash flow and the expenses are acknowledged when the actual payment is made as in cash outflow.||In accounting, the system of determination of funds; that is, income and expenditures, is truly based on the accrual system. Revenue is acknowledged at the point of sale and not when it was collected. Expenses are acknowledged when they are incurred than when they are paid.|
|6.||The duty of the financial director is to make financial strategy, managing and controlling, and decision making. Therefore, in a sense, finance starts where accounting ends.
|With accounting, the goal is to collect and render financial information. It furnishes constantly improved and easily interpreted previous data, present and future inclinations of the company as well.|