Nowadays, both accounting and finance are rapidly growing career fields that involve financial documents and managing money. However, there is a lot of difference between accounting and finance. Understanding the difference between accounting and finance is helpful for students who are deciding which career path is best for their goals.
Before understanding the difference between accounting and finance, we have to follow the definitions of both of these career paths.
What is accounting?
Accounting is the process of communication and measurement of non-financial and financial information about corporations and businesses. It includes analyzing, summarising, and reporting the financial transactions to oversight agencies, tax collections and regulators.
What is finance?
Finance is a term that is regarding creation, management and study of investments and money. Moreover, it deals with the question of how you are spending and investing your money. It includes borrowing, lending, saving, budgeting, and forecasting.
Accounting vs. Finance: the Differences
The job of an accountant is to create financial records and reports of financial transactions. To better understand we take some examples such as a forensic accountant’s job is to investigate financial documents, the position of a public accountant is to prepare tax returns for businesses or individuals, and the position of an organization accountant is to analyze financial wealth.
In simple words, an accountant’s job is to create reports and records of money through financial statements.
However, the job of professionals in finance is to manage an organization’s money. The finance professionals are called money managers and their work is to research and direct an organization’s financial transactions.
Financial advisors and financial managers look at an organization’s or individual’s liabilities to help them reach their business goals.
Whereas, the similarities between them is that both finance and accounting professionals work for financial businesses, organizations, and government agencies. But both provide different services for their clients.
So if we need help regarding taxes, then we can visit an accountant, if we need help regarding our retirement, we can visit a financial money manager. Additionally, while an organization is dependent on an accountant to create reports of their cash flow with tax regulations, so they may need a financial advisor or financial money manager to manage their monetary sources.
Education and skills required in accounting and finance
There is one more similarity between these: sometimes, the students studying finance attend accounting classes, and the students studying accounts usually attend finance classes. Students need to understand the difference between accounting and finance, including the education and skills requirements for each career field.
As we all know, most accounting careers need a bachelor’s degree for a starting position. Additionally, to qualify for a CPA credential, a certified public accountant must complete one hundred fifty postsecondary credits. The CPA credential is equal to earning a bachelor’s and a master’s degree in accounting. A Master’s degree is helpful for an accountant because it will help them in pursuing management-level careers.
Similarly, accounting for the bachelor’s degree in finance is a must for a starting position and there are many finance job titles, including financial analysts, professionals, and financial examiner. A Master’s degree in finance is also beneficial for a business manager or financial advisor.
However, both accounting and finance jobs need strong analytical abilities and excellent communication skills to provide clients with information.
Career difference between accounting and finance
There are a lot of career paths for both accounting and finance. Students have to carefully decide their career path to achieve success in the future. Here is the list below:
Careers in finance
- Risk manager: The job of a risk manager is to limit the damage caused by market changes or financial loss. To measure an organization’s financial risk, these risk managers apply risk analysis techniques and use strategies to manage financial crises.
- Investment manager: The job of an investment manager is to create and apply investment strategies for individuals or an organization. Investment managers can analyze market performance to maximize returns.
- Fund manager: The job of a fund manager is to look at trading activities and investment strategies. However, fund managers also manage mutual funds and pensions.
Careers in accounting
- Management accountant: The job of a management accountant is to analyze the financial documents of an individual or organization. Their work is to evaluate budgeting goals, plan for business expenses, and financial audit performance.
- Forensic accountant: The job of a forensic accountant is to uncover tax frauds and other financial transactions. However, most of the forensic accountants work for law enforcement agencies.
- Public accountant: The job of a public accountant is to create financial documents for an individual, including balance sheets and tax returns. To be a certified public accountant, an individual must need to complete 150 postsecondary credits.
Difference between the salaries of accounting and finance
As we all know, there is a wide range of salaries in both fields. According to the bureau of labor statistics, accounting and finance will be having a steady growth between now and 2024. To better understand the difference, we have to look at some examples of salaries in both fields.
It is noticed that there will be a steady growth of financial analysts’ jobs from 2014 to 2024. According to the bureau of labor statistics, a financial analyst’s average salary in 2014 was $78,650 per year.
Whereas, the number of accounting jobs growth will be having a growth of 11% from 2014 to 2024. The average salary is $65,950 per year, which is higher than that of a financial analyst.
Now let’s take a look at the lower end of the scale. The number of jobs is declining by 8% between 2014 to 2024. According to the bureau of labor statistics, accounting’s average salary in 2014 was $36,420 per year. From this, you can see that there is increasing and decreasing wages or jobs in accounting.
Therefore, if you have chosen to account as a profession, your reporting and recording will support finance. Both the accounting and finance fields need skills and comfort to achieve. Both are better at their levels. So I hope the information you get from this article is enough for you to choose the right track for your better future.
Top 5 reasons Why finance is interesting
There is a big question in everyone’s mind: Why finance is attractive? As we all have seen, finance is exciting and rapidly growing all around the world. There are so many reasons why a student should join the finance sector. It is very vital to understand the benefits of this career path to achieve success in his life.
Nowadays, there is an excellent expansion in companies that increases financial advisors or financial managers’ demand. Therefore, by choosing finance as your career path, you are opening millions of gates to millions of opportunities.
Here are the top 5 reasons why you should love finance
To better understand why finance is attractive here down is the list of top 5 reasons:
1. It offers a fast-paced career
There is an economic shift of finance every day that results in making it a fast-paced career. Finance provides a highly stimulating job because of the trading floor’s buzz, and the adrenaline of deals changes every time. It is not only a fast-paced career path, but it also comes with a challenging career path.
2. Development opportunities and professional training
It is said that working in a traditional bank brings you opportunities and professional-level training that is beneficial for your better future. Moreover, as you advance in your career, you will be able to obtain a professional qualification. Benefits such as training and development that everyone looks for their bright future brings this sector to the top level.
3. Salary and benefits
After graduation, the average starting salary is more. Moreover, established banks do not come up with a high salary; they also offer other benefits, including insurance, health care, travel and gym membership.
However, the great benefits of finance as your career path is lucrative and substantial bonuses.
4. Working abroad
Working abroad and international travel is one of the top benefits of the finance sector. In this sector, you can work all around the world. It is the best benefit of finance because you can see and travel all around the world.
5. Long term career plan
Having a long term career in finance is one of the best benefits of finance because everyone dreams of a long term career for a better future. Therefore, if you can manage through the tough work and perform well in a reputable company, then you can have a long term career in that particular company.
Furthermore, if you have decided to move into a different industry, choose this industry because the graduate training and development sector structure is well designed.
Lastly, looking out for these financial benefits is the best sector to choose for a better future. But both accounting and finance are good at their level. So I hope that this article will help every student who is moving forward to choose one of these career paths. Choosing the right career path is a must for a better future. Therefore, deeply study both of these sectors and then select one as your career path.