Difference Between Finance And Accounting

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A lot of people say Finance and Accounting are two halves of the same coin. But, while there are many similarities that exist between these two career fields, the two are by no means interchangeable. “Accounting can be broadly defined as the preparation, evaluation, and management of financial records, while finance is best described as the study and management of investments.” (“BAI: Finance and Accounting”, 2016)
Accounting is concerned with recording the business transactions of a company to figure out the profit or loss of that year. As stated by this Business Administration Information article, “Accountants deal with concrete numbers expressing real sums in present time, such as accounts payable and receivable or taxes owed.” (“BAI: …show more content…

This is because Finance uses all the data which is collected and gained in the accounting divisions. Financial managers will review all of this data; like profit and loss, income statement, balance sheet, cash flow statement, etc., to make monetary decisions that affect the business. Without this accounting data, these decisions would be extremely hard to make. The accounting data is crucial for future financial planning, and reviewing business’ overall performance. You need these accounting statements in order to figure out things like; how to increase money supply for future company projects, how to properly employ the company resources to efficiently produce a good that is profitable for the company. Therefore, Finance takes the past data from accounting to make future related decisions in order to achieve a company’s …show more content…

By reviewing accounting data from previous years, financial managers have figures to base their decisions from when projecting next year’s numbers, like sales and expenses. Another way financial officers uses accounting data is to predict future performance and to analyze the business’ overall performance. Also, thanks to the accounting data, we can determine if there is a surplus amount of cash not being used, and if so how we can properly invest these funds. By examining the company 's cash flow/projections, Financial Officers can determine how much cash the company to allocate for short term use and how much cash is needed to be set aside for long-term use. Based off of this, these Financial Managers can then choose bonds, stocks, or other investments options that will best suit the company goals/needs. Last but not least financial officers use accounting data to evaluate the company’s general performance. This evaluation will then help them come to a conclusion on what needs to be changed and what can remain the

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