The Nature Of Accounting And Finance
Updated: Jul 20
Accounting and finance are two of the most widely used terms in the world today. The main difference between accounting and finance is that accounting focuses solely on the day-to day flow of cash in and out of an organization or institution, while finance is a much broader term that covers many different aspects of financial management. Accounting is concerned with taxes, making financial reports to stakeholders, and generally making sure that a business is able to pay its bills on time. In contrast, finance is more concerned with long term decisions regarding the use of capital resources of the organization. Finance also takes into consideration the costs of capital expenditures as well as the effects of borrowing funds.
The primary function of accounting is to facilitate the collection of financial information by collecting data that can be used to make informed decisions about resource allocation. This includes preparing reports for various levels of management, such as managers, stakeholders, and staff. Accountants report the results of the activities of individuals, companies, and organizations in a financial reporting system known as the journal of accounts. This journal is available to the public and uses a variety of different formats. These journals include income statement, balance sheet, and statement of earnings.
A major part of the responsibility of the accountants is to prepare and submit the financial reports to the relevant customers. They ensure that the financial reporting material is reliable and up to -date. To encourage good performance and ensure accuracy of financial reports, most businesses have a specialized staff who are responsible for accounting principles, reviewing accounting procedures and documentation and checking the accuracy of financial statements. A major part of the responsibilities of an accountant is to ensure that the requirements of investors are met and that the strategies adopted are consistent with the strategies and plans of the company. Apart from this, a large amount of time is spent by accountants in analyzing the market trends and developments and designing solutions to meet the challenges faced in accounting and finance.