At first glance, it may seem that accounting and finance are the same thing. However, while they both require a flair for numbers and an analytic mind, they each have a very different focus. Accounting is heavily focused on the daily aspects of cash flow, while finance keeps an eye on the future.
The Difference Between Accounting and Finance
Though accounting and financing are closely related fields, accounting focuses more on the review and processing of financial data at regular intervals. This can include processing data related to an organization's or individual's income, payments made, outstanding debts, and financial gains and losses. In contrast, finance uses accounting data to plan and develop strategies that support financial health and work toward specific goals. Financial planners often use data provided by accounting to assess and develop financial plans.
Accounting handles day-to-day financial operations, preparing and processing a wide range of reports and financial statements regarding funds received and paid by an organization or individual. Accounting professionals also prepare and process tax documents, ensure the timely payment of taxes and provide financial advice. Certified public accountants also audit financial records and sometimes provide expert testimony in court cases.
While accounting focuses on day-to-day operations and records, finance looks to the future. These professionals help individuals and organizations manage risks and develop plans. They monitor transactions, cash flow and market trends, providing advice and plans for meeting goals in the future. Finance experts can also help implement and manage financial policies, particularly those related to credit and debt collection.
What Can You Do With a Degree in Finance or Accounting?
With a degree in accounting, you can become an accountant, bookkeeper, auditor, tax examiner, revenue agent or tax collector. You may also find a position as a budget or management analyst. Many positions require at least a bachelor’s degree, and some employers may prefer job candidates with master’s degrees and/or accounting certifications.
After earning a finance degree, you are qualified to serve as a financial analyst or financial manager. You may also serve as a personal financial advisor or even as a loan officer for a financial institution. Many securities and commodity positions, such as brokers and investment bankers, are open to those with finance degrees as well. In these types of positions, you would advise your clients on investment decisions and make investment trades on their behalf. Likewise, this type of job could involve helping companies decide what to invest in and advising them on mergers and acquisitions.
How Much Accountants Make Per Year
According to the Bureau of Labor Statistics, in 2016 accountants earned an average of $68,150 annually. However, many people in this field make significantly more or less than this. Those in the highest income bracket earned more than $120,000 as of 2016 while accountants in the lowest income bracket earned less than $43,000 per year.
How Much the Financial Industry Pays
In the financial industry, salaries vary widely depending on the position. For example, according to the Bureau of Labor Statistics (as of spring 2016), financial managers earned an average of more than $120,000 each year, personal financial advisors earned an average salary of about $93,500 and financial analysts earned $81,760. Loan officers and finance professionals involved in investments and trading earned average salaries of about $63,000 to $67,000 per year. Those in the highest income brackets for finance jobs earned between $130,000 and $200,000 per year, as of 2016.
Whether you pursue a career in accounting or finance, you will need math, analytical and organizational skills. Being detail-oriented and a skilled communicator will also help you excel in an accounting or finance career.