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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.
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!
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:
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