Interplay of Accounting, Finance, and Economics in Financial Economic Thought

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MFE 2015
SUNDAY BATCH

MFE 08- ACCOUNTING

MS. VAJIRA KUMARIHAMY

THE CONTRIBUTION OF ACCOUNTING, FINANCE AND ECONOMICS AND THEIR INTERRELATIONSHIP TO FINANCIAL ECONOMIC THOUGHT

Name : S Mallikarachchi

Student’s Registration Number :

Date : 2015/06/21

Table of Contents Page No.
1. Financial Economics 3
2. Interrelationship among Accounting, Finance and Economics 4
3. Contribution to Financial Economic Thought 5
4. Conclusion 7 1. Introduction

The inter-relationship among the three subjects – Economics, Finance and Accounting has a timeless validity.
In definition, Economics is a social science and describes the factors which determine the production, distribution …show more content…

Contribution to Financial Economic Thought

The three subject areas, Accounting, Finance and Economics are inter-related with each other as well as interrelated with Financial Economics in developing Financial Economic Thought.
If we look at the contribution of Accounting to Financial Economic Thought, the initial idea of an individual, a firm or an economy is obtained on the basis of Financial Accounting information provided. An in-depth understanding of the financial accounting information provided will guide the decisions towards an optimal resource allocation.
The contribution of Economics towards Financial Economics is somewhat obvious, i.e. concepts such as opportunity cost are used to place a value for the foregone return and validate the decision taken to employ the resources for the best option available.
The contribution of Finance to Financial Economic Thought can be depicted by way of how assets are valued based on a risk and return scale in order to maximize the wealth.
Financial Economic Thought is shaped by all these three areas. The unbreakable inter-relationship among the three areas of interest has many uses in Financial Economic Thought. Below are a few areas where the inter-relationship contributes towards the Financial Economic

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