Accounting versus Finance

So what is the real difference between accounting and finance? A lot of people get them confused or see them as one in the same, which couldn’t be more wrong. Here are a few things to remember and may help you differentiate the two.

Accounting

Accounting’s primary function is to develop and provide data measuring the performance of the company and assessing its financial position. An accounting department is responsible for preparing financial statements such as the income statement, balance sheets, and the cash flow statements – all of which looks to the past (history.)

Finance

Finance duties emphasize the future. It uses the financial statements and reports prepared by the accounting department to forecast the immediate future that assists managers to make decisions about the company’s next operational move. Budgeting is another big finance operation that may be familiar to most. This is a rough rubric to the duties of both accounting and finance areas. However, in its simplest form finance starts where accounting ends. No business should confuse an accountant’s duties to that of a finance manager.