Accounting vs Finance

Financing is to forecast the future, while accounting's main goal is to provide information about the past.

Author: Christopher Haynes
Christopher Haynes
Christopher Haynes
Asset Management | Investment Banking

Chris currently works as an investment associate with Ascension Ventures, a strategic healthcare venture fund that invests on behalf of thirteen of the nation's leading health systems with $88 billion in combined operating revenue. Previously, Chris served as an investment analyst with New Holland Capital, a hedge fund-of-funds asset management firm with $20 billion under management, and as an investment banking analyst in SunTrust Robinson Humphrey's Financial Sponsor Group.

Chris graduated Magna Cum Laude from the University of Florida with a Bachelor of Arts in Economics and earned a Master of Finance (MSF) from the Olin School of Business at Washington University in St. Louis.

Reviewed By: Patrick Curtis
Patrick Curtis
Patrick Curtis
Private Equity | Investment Banking

Prior to becoming our CEO & Founder at Wall Street Oasis, Patrick spent three years as a Private Equity Associate for Tailwind Capital in New York and two years as an Investment Banking Analyst at Rothschild.

Patrick has an MBA in Entrepreneurial Management from The Wharton School and a BA in Economics from Williams College.

Last Updated:January 30, 2024

Accounting Vs. Finance—What’s the Difference?

At a high level, accounting and finance serve distinct roles within the realm of business. While they intersect in many areas, they have core differences that set them apart.

Accounting primarily deals with the recording, reporting, and analysis of financial transactions.Accountants delve deep into the company’s financial statements, ensuring they adhere to international standards and accepted accounting principles (GAAP).

They play a crucial role in presenting accurate financial data, which aids in both internal and external decision-making.

Finance, on the other hand, revolves around the management and movement of money within an organization or economy.It encompasses a broader scope, including investment, banking, securities, insurance, and trust.

The primary focus in finance is to optimize the value and use of monetary resources, often by forecasting future financial scenarios and making strategic decisions based on those predictions.

As we read into this article, we’ll explore the intricate details and subcategories of both accounting and finance.

Key Takeaways

  • Accountants understand financial statements and analyze data for strategic decision-making.
  • Accounting is divided into financial accounting (for internal and external users) and management accounting (for internal users).
  • Finance involves the circulation of value through various financial products and activities, reflecting economic prosperity.
  • Accounting measures, processes, and communicates financial information, while finance focuses on forecasting the future and analyzing performance.
  • Careers in accounting offer stability and a higher starting salary, while finance careers offer higher earning potential and advancement opportunities.

What Is Accounting?

Accounting is the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations. 

Often measures the results of an organization's economic activities and communicates this information to various stakeholders, including investors, creditors, management, and regulators.

Financial accounting focuses on reporting an organization's financial information, including preparing financial statements, to external information users, such as investors, regulators, and suppliers.

Accounting objectives are the tasks or standards that accountants work is required to accomplish, also known as financial reporting objectives.

The goal of accountants is to provide users of financial reports with information related to the financial status, operating results, and cash flow, reflecting the performance of the management team and helping users of financial reports to make economic decisions.

Unlike accounting, bookkeeping is somewhat more simple and focuses on recording and organizing financial data. Accountants also have to complete more schooling and certifications than bookkeepers, which is why it's easier to start a bookkeeping business, generally speaking.

Main measurement tool in accounting—Currency

Any economic business, when recording, must use a certain unit of measurement. There are three types of measurement units: Physical quantity, Labor quantity and Monetary quantity (value quantity)

Accountants should carry out comprehensive bookkeeping activities. Under the commodity money system, money has a special role because it is:

Therefore, the use of currency as the primary and unified unit of measurement for accountants has become one of the characteristics of accounting. 

Of course, the two measurement units of physical quantity and labor quantity are also used, but the monetary unit of measurement is the most important.

Record the process of economic activities based on evidence and clarify the responsibilities of economic activities

In economic activities, enterprises and other units must obtain or fill in legal written certificates every time an economic business occurs. 

These documents not only record the process of economic business but also clarify the responsibility of economic activities. 
 Accountants must be based on legal vouchers to keep accounts and settle accounts. 

Accountants are not allowed to make any formal records without legal credentials. This is another characteristic of accountants, which shows that accountants' records are all well-founded and can faithfully reflect the real situation of economic activities.

Accounting's reflection on economic activities is continuous, systematic, and comprehensive

To correctly reflect the economic activities of enterprises and other units, accountants should record and calculate continuously, systematically, and comprehensively according to the order of economic business occurrence and provide necessary information for the management team. 

The so-called continuous refers to the reflection in the order of occurrence (confirmation) of economic business, which is uninterrupted from beginning to end.

The so-called systematic refers to the scientific, regular, and not disorderly classification of various economic activities by accountants using a set of specialized methods. Organize and record, and finally, provide systematic information.

The so-called comprehensive means that all valuable information for decision-making should be reflected in detail so that decision-makers can choose, and the reflection is not biased. It cannot be arbitrarily chosen, let alone omitted.

In addition, it should also reflect the material consumption of different types, different names, and different measures, as well as various complex economic activities to provide a comprehensive value index. 

What Is Finance?

Finance is a general term for currency circulation and credit activities and their associated economic activities.

In a broad sense, it generally refers to all economic activities related to the issuance, custody, exchange, settlement, and financing of credit currency. It includes buying and selling gold and silver.

It can be summarized as the issuance and withdrawal of money, the issuance, and recovery of loans, the trading of gold, silver, and foreign exchange, the issuance and transfer of securities, insurance, trust, international currency settlement, etc.

Institutions engaged in financial activities mainly include banks, trust, and investment companies, insurance companies, and securities companies, as well as credit cooperatives, financial companies, financial leasing companies, and foreign exchange exchanges.

Five Key Elements in Finance

There are five elements in finance:

  1. Financial objects: Money (funds). The currency circulation regulated by the currency system has advance, turnover, and value-added properties;
  2. Financial methods: Represented by credit methods mainly based on lending. The objects of transactions in the financial market are generally written proofs of credit relations, contract documents of creditor's rights and debts, etc...
    • Direct financing: without the involvement of intermediaries
    • Indirect financing: financing through intermediaries
  3. Financial institutions: Usually divided into banks and non-bank financial institutions;
  4. Financial market: Including the capital market, currency market, foreign exchange market, insurance market, derivative financial instrument market, etc.;
  5. Institutions and regulatory mechanisms: Supervise and regulate financial activities.

Finance job description

A job in this area is a type of career choice. This guide will outline the various aspects of a career in this industry. Firstly, a typical day in a professional’s life can vary depending on what type of business they work for and their level. 

A financing professional may start their day reading through reports to see how well the company is doing financially. They might then spend time preparing financial reports, looking at costs and budgets, and analyzing past performance to predict future trends. 

Other activities include sourcing new funding opportunities, managing projects, and ensuring financial statements meet regulations and expectations.

There are two types of professionals in this field: portfolio managers and investment bankers. The first group manages investment funds for people or companies with large amounts of money available to invest. 

These professionals typically work long hours during important trading periods such as stock market openings and closings, weekends, and evenings when markets around the world are open for trading. However, they also work during less busy times, such as Mondays and Fridays when U.S. markets are closed.

Accounting Vs. Finance—Main Objectives

In business, both accounting and finance play important roles, but their objectives, tools, and methodologies differ.

While both accounting and finance deal with the management of money, they serve different primary purposes within an organization or business context. Here's a comparison of their main objectives:


Accounting revolves around the meticulous documentation of past financial transactions. Its primary goal is to offer a clear, accurate snapshot of a business’s financial position based on historical data.

Accountants are skilled professionals who present a structured record of a company’s economic events, encompassing all transactions, assets, and liabilities.This information serves as a cornerstone for stakeholders to assess the financial health of an entity.

The main tools accountants utilize for this purpose are the three principal financial statements: the income statement, balance sheet, and cash flow statement. In essence, accounting looks back to convey “what has happened.”


Finance, conversely, is forward-looking.While it certainly takes cues from past performance, its main objective is to anticipate and strategize for the future.

Finance professionals scrutinize past data, discern trends in revenues and expenses, and use this analysis to predict how various factors might impact future outcomes.

They harness this information to guide a company’s management on potentially profitable investment avenues.In short, while accountants specialize in detailing the financial past, finance experts forecast “what might happen next.”

Thus, the distinct objectives of accounting and finance lead to varied methodologies, measurement techniques, and analytical tools when evaluating a company’s operations.

Accounting vs. finance—careers

Choosing between a career in accounting or finance comes with its own set of considerations. Each field presents unique opportunities, challenges, and rewards.

Both accounting and finance are integral components of the business world, and while they often overlap, they have distinct differences. Here’s a comparison of the two fields in terms of careers:

Accounting Careers

Generally, accounting professionals enjoy a stable career trajectory.With a typically higher starting salary compared to those in finance, accountants can expect a steady growth path and consistent earnings.

Their specialized skills are transferrable across industries, which means if one company doesn’t align with their aspirations or values, there’s always the opportunity to move to another firm. Beyond the numerical aspect, accountants are recognized and valued for their analytical acumen and strategic insights.

This prowess can potentially pave the way for them to ascend into top-tier management roles, such as Chief Financial Officer (CFO) or even Chief Marketing Officer (CMO).On average, an accountant’s annual salary ranges from $50k to $65k.

Finance Careers

The world of finance, while lucrative, can be unpredictable.Careers in finance are characterized by a higher job turnover rate, stemming from the inherent volatility of financial markets.

This dynamic nature can make it challenging to ascertain long-term job stability. However, the potential rewards in finance are substantial. Many are drawn to the sector because of its lucrative payouts and the chance for rapid advancement.

Financial professionals can anticipate an average annual salary bracket of $60k to $80k. While they might be adept at managing Excel spreadsheets, it’s a misconception to limit their skills to just that.

Financial experts also contribute strategic value to businesses, helping them navigate the complexities of the financial realm.In conclusion, while finance might seem enticing due to potentially higher salaries and swift progression, accounting offers stability, consistent growth, and opportunities for significant leadership roles.

The choice often boils down to individual preferences, risk appetite, and long-term career aspirations.

Accounting vs. Finance—How to get a job?

Both accounting and finance are sought-after sectors offering rewarding career opportunities. However, the pathway to securing a job in each field can differ in terms of educational qualifications, experience, and other prerequisites.

Here's a comparison of how to secure a job in each domain:

Finance Careers

  • Educational Background: While it's feasible to start as a financial analyst with an associate degree, job roles might be more restrictive. Most roles, especially those at higher tiers, necessitate at least a bachelor's degree.
  • Experience: To step into the shoes of a financial analyst, aspirants should ideally have around three years of relevant experience, be it in finance, accounting, or associated domains.
  • Additional Competencies: Being well-versed in fundamental concepts of economics, general business principles, and business law is often a pre-requisite.
  • Job Preparedness: Equip yourself with the right education, garner pertinent experience, and follow the necessary career steps. By ticking these boxes, one can carve out a successful path in the finance sector.

Accounting Careers

  • Scope of Opportunities: Accountants aren't limited to a single job role. They can opt to work in diverse sectors, whether that's for private enterprises (industry) or public service (firms). Specializations can range from auditing and taxation to financial analysis.
  • Educational Route: A bachelor's degree serves as the foundational stone. For many jurisdictions, aspiring accountants will also need to pass specific exams (like the CPA) to practice.
  • Gaining Experience: To solidify one's foothold in the accounting world, practical experience is invaluable. Working under an established accountant or within a company's accounting department can provide this hands-on exposure.

In essence, while both fields require a solid educational foundation and relevant experience, the specific steps and qualifications may vary. Tailoring one's education and experience to the desired field will significantly ease the job-hunting process

Researched and authored by Yiqing Qiao LinkedIn

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