Finance and accounting relatively belong to the same world of business but they differ in the scope they are pertaining. Therefore, a fine distinction is to be drawn in order to understand their role separately and all together. At a high level, Finance is the science of planning the distribution of a business’ assets. Accounting is the art of the recording and reporting financial transactions within the company or specific scope. To be in more detail, while accounting focuses on the day-to-day management of financial reports and records across the world of business, finance uses this same information to project future growth and to analyze expenditure in order to strategize company finances. Accounting figures out what happened to your business in the past.
Finance is all about raising money for your business in the future. So, most of the time any company should consider both accounts and finance in such a way that its finance makes use of all the data which is presented in the accounting like profit and loss statement to make finance related decision like how to raise money for future projects of the company, how to utilize the resources of the company in order to efficiently and effectively produce the good so that company makes profit. However, Finance apart from using accounting data also uses data from other fields like economics, statistics, costing, taxation and other such fields.
This relationship between Finance and accounting seems to be quite complexed but still evaluating their role individually would make their role much more prominent. Finance, therefore, is a future-looking concept which makes use of past data in accounting to make a decision related to the future. Without accounting data, finance will find it difficult to make the above decisions and also accounting will not be effective if it is not used along with finance.
Since both Finance and accounting are related, at the undergraduate level, it’s possible to take a joint accounting and finance degree, in order to gain a more general knowledge of both accounting and finance professions. However, those who study further will usually specialize in either one or the other, in order to gain more advanced expertise in one particular field.
