The Differences Between Accounting and Finance, Research Paper Example

A difference exists between the disciplines of finance and accounting though in most cases they are often lumped together. The implication of finance is a science that deals with the planning of business assets distribution. This means the initiation of transactions so that they can aid in terms of money, investments as well as other forms of working capital management. This incorporates the hedging of foreign exchange in addition to the interests. On the other hand, accounting has the implication of an art that deals with recording in addition to reporting of financial transactions (Gray & Johnston, 2007).  Since both disciplines have a significant function in the administration of the assets of a business, most people have tended to group them together.

In broad terms therefore, the involvement of finance is focused on the planning of the future transactions of the business. On the other hand, the involvement of accounting is focused on reporting of the financial transactions that have already passed. It is therefore quite clear that these two functions are clearly distinct (Hayes, et al. 1982).  Consequently, efficiency and effectiveness in performing the duties of the two important business duties requires a different set of skills and experiences although in both cases, assets management is the core business. This is the reason that in most cases the two functions are grouped together.

Workers in financial departments of any organization have a duty of planning for the effective distribution of the assets of the business. In this case, capital investments together with the debt backed investments are very important considerations in the improvement of the business value. Workers in accounting departments have the responsibility of tracking along with reporting the business’ financial transaction including general ledger management, management of cash flow, profitability analysis, debt management, tax payment, among others.

References

Gray, J. & Johnston, K., (2007). “Accounting and Management Action.” N Y: McGraw-Hill.

Hayes, F.O. R. et al. (1982). Linkages: Improving Financial Management in Local Government. Washington, DC: The Urban Institute Press.