accounting vs finance degree

Key Differences Between Accounting and Finance Degrees

The world of business is filled with various fields. Accounting and Finance degrees are closely related. However, they have definite differences. Anyone interested in either of these career fields should understand what makes each one unique. To help you make the right choice, here are the five major differences between these two degrees.

Separate Duties

When you decide to pursue a degree in accounting, you must have an eye for detail and be very organized. An accountant must possess analytical and quantitative skills. Since this job is done without help from others, you must be disciplined to work independently without distractions. An accountant’s duties require precision and concentration.

In the field of finance, you must also have strong math skills. Confidence and communication skills are important as well. However, your decisions must be made quickly. When a buying or selling option arises, a financier must be able to look into the future and decide what is best for a client. Although this may put you under a tremendous amount of stress, results can be rewarding.

The Utilized Tools

The fields of accounting and finance use different tools to accomplish their goals. When you earn a degree in accounting, you will use:

  • balance sheets
  • income statements
  • cash flow statements

A balance sheet shows a company’s:

  • assets
  • liabilities
  • equity

Together with an income statement, they provide insight into a business’s financial status in a set period.

A financier uses as tools:

  • ratio and risk analysis
  • capital budgeting
  • leverage

A risk analysis report defines potential dangers to a company and can help align its business objectives. Capital budgeting determines a company’s long-term investments.

Nature of the Fields

Accounting involves the methodical record keeping of a business’s transactions. It keeps track of a company’s assets and liabilities. It has a narrow scope that concentrates on professional principles and processes to manage the business. It does not influence monetary decisions.

Finance is the study of how a company’s funds are managed so that it enjoys the highest level of success. It has a wider scope that encompasses a range of business specialties, including financial strategy for spending and investments. Finance studies the value of money as it changes with time.

Various Branches

When comparing degrees in finance and accounting, it is important to explore each field’s branches. Accounting is broken into financial, cost, and management branches. From an investor’s prospective, financial accounting helps a company keep track of overall financial health. Cost accounting helps a business calculate the cost of producing a product. Management accounting focuses on the impact of certain company decisions, including budgeting and resource allocation.

The three branches of finance are:

  • managerial
  • personal
  • corporate

These branches deal with the ideas of:

  • money
  • time
  • risk

Finance management is the area that helps select the best investment plans. Personal finance deals with issues on an individual level. Corporate finance is concerned with a business’s activities.

Financial Position Versus Future Performance

Accounting helps a business understand its current financial position. All financial statements are based on money received and lost during a set period. On the other hand, finance deals with forecasting the performance of a company into the future. A financier will analyze the best investments and choices that will bring success down the line.

Conclusion

Both accounting and finance are part of economics and are interdependent. A person with a degree in accounting targets the past. An individual with a degree in finance focuses on the future. They both play important roles in business. However, understanding the differences will help you decide what degree path will fulfill your interests.

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