Finance vs Accounting: Although they are two of the most sought-after business degree disciplines, are accounting and finance the same thing? Will both courses prepare you for the same kinds of careers and can the same abilities be applied in both fields?
The contrasts between the two are highlighted in this Finance vs Accounting comparison so you can get a better understanding before picking which subject to major in.
Objectives of Finance vs Accounting
Professionals in accounting and finance have certain goals in common and some goals that are very different. The primary concerns of each profession are listed below.
- Presentation of results
- A picture of a company’s financial situation
- Accruals and smoothed-out financial information
- Accuracy and reliability
- A record of history
- Following accounting rules and principles
- Presentation of results
- Analysis and interpretation of a company’s financial position
- A focus on cash flow and economic value
- Accuracy and reliability
- A prediction of the future
- Undoing accounting rules (not in all cases)
Finance vs Accounting: The Major Differences
1. Accounting Records the Past while Finance Looks to the Future.
Financial experts (such as financial advisors, financial planners, and investment bankers) are typically involved in raising capital and making investments to increase a company’s wealth for a future return. Through ideas like borrowing, saving, and investing, they make sure a company has enough cash to operate in the future.
Accounting, on the other hand, has a propensity to look backward; accounting experts monitor, record, and analyze an organization’s financial activities. This include tracking a company’s financial flow, keeping track of accounting ledgers, and disclosing profits and losses to make sure that the events of the past are accurately recorded.
Bottom Line: Accounting focuses on recording historical financial transactions, whereas finance is concerned with arranging for future financial activities.
2. You can Specialize in both of these Fields.
Finance vs Accounting: Both offer distinct branches and professions in which you can specialize, much like in other professions. Once you graduate, you can choose to specialize in other fields based on your interests.
Personal finance, corporate finance, and governmental finance are the three primary subfields of finance.
Relates to financial choices that an individual will face. Paying for education, investing in and saving for retirement, preparing an estate in the event of death, and insuring against unforeseeable events are all topics related to personal finance that are frequently discussed.
Financial planners and relationship or private wealth managers are among the positions in the personal finance sector.
Focuses on the organization’s financial future and frequently involves increasing the value of a firm, including finding undervalued assets to buy, securing debt or a loan for business expenses, and evaluating a company for merger or acquisition.
Trader, financial analyst, credit analyst, investment banker, and fund manager are among the careers in this field.
This has to do with the distribution and administration of funds at state, federal, or government-affiliated organizations (such as the Ministry of Finance, Bank Negara Malaysia, and Employee Provident Fund (EPF)). To provide value to the public, it involves decision-making across a longer time horizon.
Valuation analyst, investment operations associate, and debt/equity research analyst are all positions in the public finance sector.
On the other side, financial accounting, management accounting, tax accounting, and audit & assurance services are the major fields of accounting.
Produces thorough reports on a company’s financial transactions to assist firms in keeping track of their overall financial health. Recording financial transactions and creating reports, such as balance sheets, profit and loss statements, and cash flow statements, are among the tasks.
Accounts executive, accounts specialist (accounts payable/receivable), and bookkeeper are a few of the occupations in financial accounting.
focuses on reporting and analyzing financial data to assist organizations in making choices that will help them achieve their goals and objectives. Financial forecasting, budgeting, cost distribution, and cost-benefit analysis are a few of the duties covered by management accounting.
Management accountant, budget analyst, and financial controller are all positions in this branch.
Focuses on tax-related accounting procedures. The Inland Revenue Board (IRB) of Malaysia, which establishes precise regulations that people and businesses must abide by when reporting taxes, established the laws that govern tax accounting.
Tax advisor and consultant are two jobs in tax accounting.
Auditing & assurance services:
Checks to see if a company’s financial records adhere to correct accounting principles. Auditors use techniques like physical inventory counts, reviews of invoices and payments, and analyses of discrepancies in account balances to gauge the integrity of financial transactions.
Auditor and internal audit associate are two jobs in the audit sector.
The bottom line is that finance includes public, private, and personal money. Financial accounting, management accounting, tax accounting, and audit are all disciplines of accounting.
3. There could be Different Employers.
As a finance graduate, you can concentrate your job search on investment banks like Goldman Sachs, Deutsche Bank, JPMorgan, and CIMB Investment Bank as well as commercial banks like Maybank, CIMB Bank, and Citibank. You can also target private equity firms like Creador and NAVIS Capital as well as government and government-affiliated businesses like Bank Negara Malaysia and Employees Provident Fund.
Most graduates who major in accounting look for work in one of the Big Four accounting companies, which include Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY), and KPMG. Many businesses also need the services of an accountant, in addition to accounting firms.
It is important to note that all businesses, regardless of size, require accounting specialists, but not all businesses need finance professionals. This implies that as an accounting graduate, your work options may be significantly greater.
4. Each Industry has Unique Professional Requirements.
You can pursue professional certifications like the Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), and Registered Financial Planner (RFP) if you have a degree in finance.
On the other hand, if you intend to pursue a career in accountancy, you can be accredited by a number of professional organizations, including the Institute of Chartered Accountants in England and Wales (ICAEW), Chartered Institute of Management Accountants, and Association of Chartered Certified Accountants (ACCA).
Top Tip: Having professional credentials will make you more desirable to potential employers in the financial or accounting fields, which can greatly boost your chances of getting employed and earning more money!
5. Some Financial Positions Pay more than those in Accounting.
Although both accounting and finance can be lucrative professions, there are some sectors of finance that pay more than others.
What can a finance major anticipate in terms of salary? A degree in finance doesn’t seem to be the key to a high-paying job at first appearance. An individual with a bachelor’s degree in finance typically earns $101,038 annually. The median income (half earn less, half earn more) for all bachelor’s degree holders is just somewhat lower at $93,664 (half earn less, half earn more).
Obtaining a bachelor’s degree in accounting is the most direct route to becoming an accountant. But when it comes to finding a career, an undergraduate degree in finance enables you to cast a larger net. Additionally, with some additional education, you can still take the CPA exam, which qualifies you for careers in accounting that pay more than those that do not.
In order to earn a CPA license, most states require students to complete 150 semester hours of education. A master’s degree isn’t strictly necessary to take the exam. However, getting there might necessitate a Master of Business Administration (MBA) with a specialty in accounting if you are a finance major. The average yearly income for CPAs, according to Payscale, is $91,000.
Bottom Line: When compared to accounting, some financial sectors—like investment banking—pay greater compensation.
Requirements for Admission to Degrees in Accounting and Finance
You will not be required to have relevant professional experience or a degree in accounting or finance to study these subjects at the undergraduate level. However, candidates will need to demonstrate both their aptitude for mathematics and their interest in the accounting and financial industries. With high school and A-level credentials in relevant STEM and FAME disciplines including business, mathematics, economics, computer science, and other sciences and technologies, this is possible. Additionally, extracurricular activity like participation in a math club may be considered.
You will be expected to have finished a related undergraduate degree and/or have a number of years of relevant professional job experience if you are applying to a postgraduate accounting or finance program. Students who can demonstrate their quantitative and analytical skills through the material covered in their prior degree or by passing a test like the GMAT or GRE may also be taken into consideration. However, this is not always required.
Frequently Asked Questions
What distinguishes finance from accounting?
The primary distinction between both is that people who work in accounting often focus on recording and reporting on those financial transactions, whereas those who work in finance typically focus on planning and directing those transactions for an organization.
Can you transition from finance to accounting?
Even without a prior relationship, you are still able to switch careers from accounting to finance. Most people who change occupations have worked in public accounting for two to four years before realizing they don't enjoy the industry.
Finance or accounting, which is harder?
While both accounting and finance can be challenging degrees, accounting is regarded as being more challenging due to its greater demands on discipline and numerical proficiency. Because accounting depends on specific sets of arithmetic concepts, it is more complicated.
What is the best sector for accountants to work in?
An accountant's median yearly salary is significantly higher than the national median for all jobs. Accounting professionals make the most money in the finance and insurance, business and enterprise management, tax preparation, and government sectors.
Finance vs Accounting: Conclusion
A dual accounting and finance degree can be pursued at the undergraduate level in order to get a more comprehensive understanding of both the accounting and finance professions. However, in order to develop more in-depth experience in one particular discipline, those who pursue further education typically specialize in one or the other.
Finance employs the same data that accounting uses to maintain financial records and reports on a day-to-day basis in the business world to forecast future growth and analyze spending in order to plan the financial future of the organization. Therefore, students majoring in finance are likely to be more interested in financial strategy and control, whereas students majoring in accounting are likely to be more interested in professional principles and procedures that are used to manage numbers rather than affect them.
There you have it, then! Even while accounting and finance are closely related, they are ultimately two separate areas that will lead you down different career routes. As a result, consider your options carefully based on your hobbies and professional objectives. Good fortune!