Accounting Vs Finance

 Accounting and finance is so connected each other but still, there are lots of differences of Accounting and Finance which you should know.

1. On the Basis of Meaning 

Accounting 

It is the science to record the transactions. It is also art to transfer the values from bill, vouchers, invoices, receipts and cash memo to day book. We can explain accounting as the system of scientific recording which is used for calculating  the net profit from all the transaction. Whole accounting system is worked on the following accounting equation.

  Assets = Capital + Liability

Finance 

In simple words, Arrangement of funds is called finance. All organizations need finance for operating its different activities. So, we can say finance is just like blood for survival the business in changing economic environment. Fund, money, saving, cash, reserves and assets are the basics of finance. Finance word is very deep and in modern age, this word is also known Business Finance. To create equilibrium in  business finance, we used different tools like financial analysis, financial planning, ratio analysis, cash flow analysis, fund flow analysis and working capital management analysis.

2. Base 

Accounting 

Total Accounting is based on two things. One is business transactions and second is the Double Entry System. 

Finance 

Finance is totally based on the Financial Statements which is made through proper accounting of business. For example, bank has to give the business loan to a person. Bank will check its bank statements. What is bank statement, it is part of bank accounting. Is customer's accounting record good in same bank. Then bank will read the financial statement of same customer and find the financial strength of same person to pay the loan. 

3. Aim 

Accounting

Aim of accounting to help business by showing its financial statements. There are three financial statements. Income statement, balance sheet and cash flow statement. Income statement shows the performance of business and which product is top sale. It means, it will direct business where it has to focus. Balance sheet tells the strength of business. If financial position is weak due to taking big loan, business can focus to increase financial position to repay loan by increasing its revenue and generating its assets. Cash flow statement's aim to show cash position of business. If it is strong, business has power to pay its all liabilities without shortage of working capital.

Finance 

Its aim is to provide financial freed of any person or business. If you know deep about finance science. You will focus to wealth creation. You will focus to invest your money in profitable area. You will focus to save money. You will focus to reduce your expenses. You will focus to use the tools of leverage and tools of ratio analysis for better wealth management. With finance, we can take more complex decision with financial data

a) Which company's share, I have to buy

b) Will I buy own home or be live on rent

c) Will I buy property with capital or loan

d) Will company change its capital structure and decrease stock proportion and increase loan proportion?

4. Career 

Accounting 

If you know accounting, you can become independent accountant, do accounting job, become CA, Auditor, Cost Accountant and Mgt. Accountant and account officer and chief-accountant

Finance

If you know finance, you can become independent personal finance advisor, finance officer, finance manager, finance minister and CFO.

5. Rules 

Accounting

You need to follow the rules of GAAP and  auditing standards.

Finance

You have to know the provisions of taxation, SEBI Rules, RBI Rules and company law 2013 and property laws, Latest Indian finance bill and saving schemes. You have good knowledge of MF and Demat account also. 

6. Show Image

Accounting

It shows the image what happened in past and you can see your business past through accounting reports. Like Profit and loss account for the year ended 31st march 2022. What does it means, you can find that for working in the business for one year, you either gets profit or loss through operation in past one year. Past was not in our hand but with this, we can take better decision for present and future on the basis of past accounting reports. 

Finance

It shows the image what will happen in future. Future is not in our control but financial estimations and prediction will be helpful to safe and confident steps for future.