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Comparing Accounting vs Finance
Accounting is focused on recording and reporting how a business performed in the past, while finance is focused on analyzing and forecasting how a company is expected to perform in the future. This guide will compare accounting vs finance across various aspects.
Accounting is concerned with collecting all financial data for an entity, entering it into a ledger, and generating reports the summarize what happened in the past.
#1 Collecting Data
Accountants are responsible for collecting all financial data and may do so by obtaining receipts, invoices, and reports that pertain to all a business’ revenues and expenses. For example, all customer orders, prices paid for each product, inventory records, payroll reports, and capital purchases.
#2 Managing the General Ledger
The central system accountants use to manage the data they collect is called the general ledger. The ledger keeps a record of all transactions that take place, no matter how big or small. To learn more, see our guide to debits and credits. The general ledger is then used to generate financial statements.
#3 Generating Reports
The main form of the report that accountants prepare is the set of consolidated financial statements, which includes the income statement, balance sheet, and statement of cash flows. In addition, there are lots of ad-hoc analysis and management reports that are generated.
Below is an example of an accounting report: the income statement.
While accountants are the ones who prepare financial statements, financial analysts are the ones who spend a great deal of time analyzing them and looking for insights into how the company is performing. This includes the evaluation of profitability, rates of return, margins, growth, and many other types of financial statement analysis.
The objectives of professionals working in accounting and finance have some overlap and some major differences. Below is a list of what each profession is primarily concerned with.
Accounting
Accuracy and reliability
A record of history
Following accounting rules and principles
Presentation of results
A picture of a company’s financial situation
Accruals and smoothed-out financial information
Finance
Accuracy and reliability
A prediction of the future
Undoing accounting rules (not in all cases)
Presentation of results
Analysis and interpretation of a company’s financial position
Both accounting and finance offer rewarding and exciting careers. Which one is a better fit largely comes down to your personal objectives and personality type. Below are some of the most common jobs and careers for each profession.
As you can see, there is some overlap between accounting vs finance jobs, as many of these positions are suitable for people from either background. Check out CFI’s Interactive Career Map to learn more!
Additional Resources
Thank you for reading this CFI guide to accounting vs finance. In order to help you in your career progression, these complementary resources will be helpful:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
Additional Questions & Answers
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
CFI is a global provider of financial modeling courses and of the FMVA Certification. CFI’s mission is to help all professionals improve their technical skills. If you are a student or looking for a career change, the CFI website has many free resources to help you jumpstart your Career in Finance. If you are seeking to improve your technical skills, check out some of our most popular courses. Below are some additional resources for you to further explore:
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