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Understanding the Difference Between Finance and Accounting

Understanding the Difference Between Finance and Accounting

Maybe you’ve heard the concept that all flowers are plants, but not all plants are flowers. That can be a good way of looking at finance and accounting. Are they similar? Yes. Are they the same? No. While both revolve around business and money or assets, and they share overlapping skills and knowledge, they are two distinct fields. One can evolve into a career with the other, but not usually vice versa. So, what’s the difference between accounting and finance? Let’s take a look.

What is Finance?

The broader of the two fields is finance. It can be defined as the management of money in order to make more money and mitigate loss. It includes such activities as investing, borrowing, lending, saving, forecasting, and budgeting, whether for personal, corporate, banking, or public/government entities. 

Those in finance often manage money in careers related to:

  • Investment banking
  • Wealth management
  • Corporate finance
  • Insurance
  • Commercial banking
  • Sales and trading
  • Accounting
  • Equity research
  • Treasury
  • Financial planning
  • Mortgage lending

With a career in finance, you may be involved with financial issues like interest rates, yield, digital currencies and assets, cash flow, risk and return, net income, financial statements, cost of capital, valuations, shareholder relations, and creating value. Depending on the specific area that the finance major wishes to pursue, specialized certifications, experience, and training may be required.

What is Accounting?

Did you pick up on a key difference between accounting and finance? One of the careers outlined for those with a finance degree is accounting. Accounting, then, is the more specific of the two fields. While those in finance can pursue careers in accounting, those with a degree in accounting will generally require additional training to broaden their scope for a career in finance.

Accounting can be defined as recording, cataloging, analyzing, and reporting the financial transactions of an organization. It is the number-crunching arm of business and is more concerned with “the now” of finances, giving management the data and insight into current finances so it can make strategic decisions about future expenditures and growth.

Accountants can also specialize in an interesting area to target their careers. Types of accountants can include:

  • Auditor
  • CGMA – Chartered Global Management Accountant
  • CPA – Certified Public Accountant
  • CA – Chartered Accountant
  • Financial Controller
  • Forensic Accountant
  • Government Accountant
  • Investment Accountant
  • Management Accountant
  • Project Accountant
  • Staff Accountant
  • Tax Accountant
  • Tax Examiner

Fortunately, accounting is a critical function within all types of institutions, so job opportunities will remain consistent for those choosing this career path. As with certain finance roles, it is important to note that some accounting specializations require earning certifications, passing relevant exams, or gaining experience.

Similarities Between Accounting and Finance Degrees

At a minimum, jobs in finance and careers in accounting typically require a bachelor’s degree, with more opportunities becoming available with advanced degrees. Both Ottawa University’s BA in Accounting and BA in Finance are comprised of the same core courses:

  • Accounting for Business Operations
  • Macroeconomics
  • Microeconomics
  • College Algebra, Discrete Mathematics, or Business Mathematics
  • Business Statistics, Introduction to Statistics, or Quantitative Methods in Business
  • Business Ethics

Differences Between Accounting and Finance Degrees

Now that we have established the similarities, what is the difference between an accounting degree and a finance degree? If you want to study accounting, you should take classes in accounting practices and cost management. Moreover, if you study finance, you will want to take a deeper dive into investments and international finance. Your education now diverges into the following targeted courses to prepare you for unique career paths.

Accounting Courses

  • Accounting for Business Operations
  • Financing and Investing Activities
  • Cost Management
  • Intermediate Accounting, I & II
  • Federal Income Tax
  • Advanced Accounting, I & II
  • Auditing
  • Foundations of Finance
  • Seminar in Applied Accounting

For those who wish to tailor their degree to open up job options upon graduation, the BA in Accounting offers the following concentrations:

Finance Courses

  • Financing and Investing Activities
  • Money and Banking
  • International Economics
  • Behavioral Finance
  • Foundations of Finance
  • Investment Theory
  • Futures and Options
  • Crypto Assets: Digital Currencies and Assets
  • Seminar in Applied Finance

Another option at the undergraduate level is a BA in Economics with a Finance Concentration, which leads to increased career opportunities within the field of economics.

Advanced Degrees in Finance and Accounting

At the graduate level, Ottawa University also has several relevant offerings in accounting and finance. The Master in Accountancy prepares students for careers as professional accountants in public practice, industry, government, and not-for-profit organizations and helps them meet the 150-hour educational requirement for the Certified Public Accountant (CPA) exam in most states. 

The MBA degree is another great choice for those seeking careers in finance and accounting. It develops well-rounded business acumen with directed training through Concentrations in Accounting or Finance.

Should You Choose a Career in Finance or Accounting?

Even though finance is considered the broader of the two careers and accounting is more narrowly focused, it is much more complex than the “forest vs the trees.” Each requires extreme attention to detail and expert analytical capabilities. But if you prefer the big picture, wealth generation, management, and the strategizing side of money, then finance may be the career for you. If, on the other hand, you are drawn to the numbers themselves and the story they tell, then accounting could be a better fit. Another deciding factor might be the outlook and salary for jobs in finance and accounting.

Accounting Career Outlook and Salary

On average, accountants and auditors made $77,250 annually in 2021, and the field is expected to grow by 7% through 2030. Over the next ten years, approximately 136,400 job openings are projected each year. As the economy grows, accountants will be needed to prepare and examine financial records. Additionally, as more companies are expected to go public, there will be a greater need to handle financial documentation.

Finance Career Outlook and Salary

Roles in the field of finance, on the other hand, tend to garner higher wages, depending on the level of education, certifications, and experience. For example, personal financial advisors earned an average of $94,170 in 2021 (5% projected growth) while financial managers earned $131,710 (17% growth). The superior growth in finance likely correlates to the increasing complexity of today’s global market.

Start a Career in Finance or Accounting

Whether you choose to pursue jobs in finance or accounting, the key is to start preparing now. Our enrollment advisors are here to help you choose the best path for you. Get started in one of our undergraduate online programs or a master’s level degree and advance your career in accounting or finance. The future awaits!

Recommended Readings

What Can You Do With a Finance Degree?

Becoming an Accountant

Lucrative Jobs in Finance

Posted: 09/13/2022 by OU Online
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