Difference Between Finance and Accounting
Finance and accounting are two entirely different disciplines that are generally considered one and the same thing. Strictly speaking, finance is the science that deals with the planning to carry out distribution of business assets. On the other hand, accounting is the art of recording and maintaining reports of financial transactions. Since both disciplines are concerned with the management of business assets and that is why people tend to confuse them as the same.
As discussed above, professionals who are working in the financial department of an enterprise are concerned with planning the distribution of business assets. This includes the collaboration required for capital investments and investments supported by debts for the sole purpose of enhancing the value and profitability of the business. Those part of the finance department also plan and strategize the exit phase for the investors of the business which is the way in which the investors of the business get their ultimate financial benefit. The Chief Financial Officer is responsible for engineering the financial goals and objectives of the business. He or she is supported by a team that focuses on Financial Analysis, Financial Management, Budgeting, Purchasing and Accounting.
On the contrary, professionals who are working in the accounting department of a business are concerned with keeping track of financial transactions and creating their appropriate reports. Accountants are generally responsible for maintaining the conventional ledger, cash flow management, collections, identifying revenue, reviewing profitability, reporting earnings, management debt and paying taxes. The financial transactions are researched and reported by accountants and the health or stability of the enterprise is governed according to a standard set of principles and rules known as the Generally Accepted Accounting Principles (GAAP) along with the Section 446 of the Internal Revenue Code. Job posts in the accounting field include Financial Reporting Accountants, Auditors, Bookkeepers, Accounts Receivable Clerks, Accounts Payable Clerks, Controllers, Treasurers, and Tax Accountants. Generally, the whole of the accounting function of a business reports to the Chief Financial Officer.
So, generally speaking, finance is related to planning and strategizing future financial transactions while accounting is concerned with past financial transactions. These are a couple of different disciplines that require different skills, but they are related to the management of assets. That is exactly why they are lumped together almost on all occasions.