Studentnomics

This all-time classic movie by Frank Darabont is the story of an accountant, Andy Dufresne, who gets falsely caught in the murder of his wife and her lover. The film shows how he tries to save himself from the brutal prison life by using his financial knowledge.

This blog, in addition to highlighting the redeeming virtues of having finance and accounting expertise, is an attempt to clarify the differences between these terms along with its relationship with Economics.

There are lots of ways that these terms can be explained, but this is how Oxford Dictionary explains them:

Finance (noun):
the management of large amounts of money, especially by governments or large companies.
“the firm’s finance department”

Finance (verb):
provide funding for (a person or enterprise).
“the health service is financed almost entirely by the taxpayer”

Accounting:
The systematic recording, reporting, and analysis of transactions, particularly financial ones, in order to support effective management and decision‐making, by providing the required information

What is the difference between finance and accounting?

The main difference between them is that those who work in finance typically focus on planning and directing the financial transactions for an organization, while those who work in accounting focus on recording and reporting on those transactions.

Economics is the study of how a society organizes its money, trade and industry.

Finance and Economics are related, but not identical disciplines. Economics studies local or global markets, human behaviour, goods and services, etc. Finance focuses on financial systems and everything related: banks, loans, investments and savings.

Accounting focuses on the day-to-day flow of money; it records and reports on what has already happened and whether it has happened in line with laws, regulations and business standards.

Finance looks at money that will be spent, asking questions such as how, on what, when and why? Finance looks after assets and plans how these assets are distributed.

To put it very simply; accounting is about money that has been spent, and finance is about money that will be spent.

So what about Economics? In some ways, it combines aspects of both accounting and finance, and applies them to the wider society.

The difference between the two jobs require different skills, personalities, and goals. While accounting is focused on risk-management in financial matters, finance is more future-oriented and focused on business development and growth.

If you love looking at the numbers and trying to find the best solutions, a career in finance is right up your alley. You may have to piece together a puzzle of details in order to find an answer to a large problem. Successful financial professionals enjoy the problem-solving aspects of their career.

If you like studying the past, that could be a good sign you’d enjoy accounting work, while if you enjoy trying to think about the future will hold, you may prefer finance work.

If you have an interest in local, national or world affairs and the factors that drive markets, economics might be the major for you.

An Economist is an expert who studies the relationship between a society’s resources and its production or output. Economists study societies ranging from small, local communities to entire nations and even the global economy.