Accounting vs Finance: Which Should I Pursue in 2022

Accounting and Finance are similar in certain ways, as both disciplines deal with crushing numbers. However, there are distinctive differences between accounting vs finance as disciplines.

Bearing this in mind, this read will be talking about these disciplines. It will also help you make a better decision as to which to study or pursue as a career.

According to the Burea of Labour Statistics, the need for Accounting and Finance officers will increase by 10% and 12% respectively in three years. This has made it pertinent that those still looking for a career path, who are good with numbers and interested in business, must read this article and make a choice between Accounting vs Finance.

If you’re looking for an opportunity to advance your career in the business sector, working in finance or accounting could be a wonderful idea for you. Fortune 500 Companies and those below continue to have needs for guys in Accounting and Finance.

It is for these reasons I urge you to read through this article. Check out the comparisons between Finance vs Accounting. Examine their broad career paths and benefits.

Differences Between Accounting Vs Finance.

While Finance mainly focuses on planning and directing the financial transactions for an organization, accounting focuses on recording and reporting on those transactions. 

Accounting:

Simply put, accounting is the organization and management of financial information or data, whereas finance is the management of money in its entirety and forms.

The FAME subjects (finance, accounting, management, and economics) comes from their vital role in the world of business, particularly those first two letters of the acronym: accounting and finance.

Furthermore, the discipline has a relatively narrow focus, while Finance is wide-ranging, covering an array of specializations in the world of business, economics, and banking.

An accounting degree will provide a foundation for specialized accounting careers, as well as many other related careers. Accounting careers typically involve analyzing and utilizing financial information in order to evaluate a business’s financial position.

This can involve anything from basic book-keeping to managing balance sheets and income statements. They often have a large focus on past records and present reports. Involving the creation and analysis of these records. And now often also extend to encompass planning, controlling, decision-making, stewardship, accountability, and more.

Financing:

On the other hand, finance is a great starting point for careers in financial services across the business, banking, and consultancy sectors. According to US salary data compiled by PayScale, finance careers also have the potential to be slightly more lucrative than most accountancy.

This is due to the fact that finance careers solely focus on the management of current and future figures of a business or organization.

The aforementioned means that those in finance careers often have the added responsibility of predicting and analyzing the potential for profit and growth. Assessing monetary resources, utilizing statistics and reports, and also looking externally for future funding options.

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Accounting vs Finance

At the undergraduate level, it’s possible to take a joint Accounting and Finance degree, in order to gain a comprehensive knowledge of both careers. However, those who study further will get to practice in either one or the other, in order to obtain advanced expertise in one particular field.

Accounting focuses on the day-to-day administration of financial reports and records across the business world. While finance uses this same data to report future growth and to analyze outgo in order to plan a company’s finances.

In other words, finance degree students will likely be more interested in financial strategy and control. While accounting degree students will be more focused on professional principles and methods, used in order to manage numbers rather than influence them.

What do Accounting Degrees Cover?

An accounting degree will provide a base for specialized careers in the discipline, as well as many other related careers. It typically involves analyzing and utilizing financial information in order to evaluate a business’s financial position. It cuts across basic book-keeping to managing balance sheets and income statements.

In addition, it usually has a large focus on past records and present reports, requiring the creation and analysis of these records, and now often also extend to encompass planning, controlling, decision-making, stewardship, accountability, and more.

Although it is fair enough to pursue accounting careers with just a bachelor’s degree. A postgraduate study is an option for those who want further specialized knowledge in a particular area.

In order to become a chartered accountant, you’ll need to gain further professional qualifications specific to the country in which you wish to work. Depending on the hiring business, however, these professional qualifications can sometimes be gained on the job, often with subsidies from your employer.

What Are The Areas Of Specialization In Accounting?

The discipline offers a range of specialties to students. Therefore, those who study it can often specialize in careers such as auditing, tax, risk assessment, international accounting, and management accounting.

Forensic accounting is another possible option. Allowing students to immerse themselves in real-life case studies in order to provide a rounded understanding of how accountancy processes are used within legal proceedings.

Such cases might relate to fraud, electronic crime, insurance claims, bankruptcy, and corporate ethics. As with finance degrees, those who wish to study accounting with further specialization and independent research are also able to undertake a further postgraduate degree at MRes or Ph.D. level.

Career Prospects in Accounting

Many people consider accounting to be a subset of finance, while others refer to it as the “language of business.” In the business world, those who work as accountants use a standard set of rules and principles, known as the Generally Accepted Accounting Principles (GAAP).

It’s used to track and report on the financial transactions of a business and often manages the general ledger, cash flow, and tax obligations.

Accountants typically work with journal entries, bank reconciliations, invoicing, and similar processes that relate to the daily operation of a business. They may also create quarterly and annual financial reports, analyze profitability, manage debt, audit internal transactions and report earnings.

Careers in accounting include:

  • Financial reporting accountant
  • Auditor
  • Bookkeeper
  • Cost accounting manager
  • Accounts receivable clerk
  • Accounts payable clerk
  • Controller
  • Treasurer
  • Technical accounting manager
  • Tax accountant

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What Do Finance Degrees Cover?

A finance degree offers a significant starting point for careers in financial services, across businesses, banking, and consultancy sectors. This is because finance careers typically focus on the management of current and future figures of a business or organization. As opposed to just the recording of past and present income and expenditure.

Furthermore, this means that those in finance often have the added responsibility of predicting and analyzing for profit and growth. Assessing monetary resources, utilizing statistics and reports, and also looking externally for future funding options.

What Are The Areas Of Specialization In Finance?

Common specializations for those who study finance at the degree level include corporate finance, financial evaluation, behavioral finance, and derivatives.

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It also includes capital markets econometrics, investment banking, financial modeling, and quantitative finance.

Further include investment management, financial regulation, financial reporting, and even some aspects of accounting.

These specializations, although taught within one program at the undergraduate level, are sometimes administered as entire courses in their own right at the postgraduate level. Other possible programs include financial management, banking, international finance, financial engineering, risk, and financial planning

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Career Prospects in Finance

Finance is a broad field involving the management of money that encompasses anything from corporate finance to personal, financial planning.

Finance professionals often evaluate, control or govern the monetary resources, investments, and assets of an organization with a focus on profitability.

Also, they may be involved in the early stages of expansions and acquisitions. While playing a key role in helping an organization respond to trends in the marketplace. To either capitalize on upturns or help the organization withstand downturns.

Those who work in finance often deal with others outside the organization, such as government agencies, banks, investment firms and services, stockholders, and suppliers.

However, career prospects in finance holders include:

  • Investment banker
  • Financial broker
  • Financial manager or planner
  • Financial advisor
  • Financial analyst

What Are The Entry Requirements For A Degree in Accounting and Finance?

If you are interested in studying accounting or finance at the undergraduate level, you don’t need to have relevant work experience. Also, not having an academic qualification specifically in accounting or finance isn’t a barrier.

However, applicants will be required to prove their mathematical proficiency, along with their interest in the accounting and finance areas. This can be done with high school and A-level qualifications in related STEM and FAME subjects. Subjects such as businessmathematics, economics, computer science, and other sciences and technologies. Extracurricular activities such as a math club membership may also be taken into account.

If you are applying for a postgraduate accounting or finance program, you are meant to have completed a related undergraduate program and/or a number of years’ relevant professional work experience.

However, this is not always necessary. Students who can prove their quantitative and analytic capabilities through the content covered in their previous degree or by taking an exam such as the GMAT or GRE may also be acknowledged.

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Why Study Accounting or Finance At The Graduate Level?

Due to the high demand for graduates who are ready to keep pace with continuous developments, new processes, changing markets, and emerging technologies, it has become highly beneficial to go beyond the undergraduate level.

Those who study accounting or finance at a postgraduate level often profit from a stronger understanding of the theories and models which bear the surface-level processes. This can make them better equipped to adapt to any environment and make solid business decisions at a management level.

Are there Further Qualifications needed to become an Accountant?

In order to become a qualified accountant, you will need to gain a professional accountancy qualification such as the globally recognized Association of Chartered Certified Accountants (ACCA) or Chartered Institute of Management Accountants (CIMA) certificate. If you study at the postgraduate level, depending on the specific credits and modules you take, you may find that you are exempt from having to take these external qualifications.

Finance vs Accounting: Salary Expectations and Job Outlook

According to an analysis from top-paid business majors for US graduates, NACE (the National Association of Colleges and Employers) summarized that starting salaries for accounting majors in the US averaged US$57,511. While finance majors started at a slightly higher salary of US$58,464.

Furthermore, at the postgraduate level, this gap widens. Finance postgraduates earn an average of US$74,201 in comparison to accounting postgraduates.

Accounting PGs earn an average starting salary of US$69,605. Although this would suggest finance is the more lucrative route, if you decide to gain a professional accounting qualification on top of your academic degree(s), as a certified accountant you could earn up to US$68,000.

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Typical Course Content for Accounting:

  • Auditing
  • Budget Analysis
  • Business Strategy
  • Financial Accounting
  • Financial Reporting
  • Forensic Accounting
  • Information Systems
  • International Accounting
  • Macro/Microeconomics
  • Management Accounting
  • Professional Standards And Ethics
  • Quantitative Analysis
  • Tax Accounting

Typical Course Content for Finance:

  • Advanced derivatives
  • Financial engineering
  • Asset Markets
  • Financial planning
  • Behavioral finance
  • Corporate finance
  • Economics/ Econometrics
  • Financial Mathematics
  • International Finance
  • Financial management
  • Risk Management
  • Financial Accounting
  • Venture Capital

Career Potential For Accounting:

  • Accountant(trainee,public,professional and certified)
  • Actuary
  • Auditor
  • Bookkeeper
  • Budget Analyst
  • Credit controller
  • Financial consultant
  • Forensic accountant
  • Financial examiner
  • Payroll administrator
  • Risk assessor
  • Treasurer

Career Potential For Finance:

  • Commercial banker
  • Financial manager
  • Financial trader
  • Insurance officer
  • Financial consultant
  • Investment banker
  • Quant specialist
  • Hedge fund manager

Key skills Gained: Accounting Vs Finance

  • Quantitative specialized knowledge of varied accounting topics and techniques.
  • Awareness of GAAP(Generally accepted accounting principles)
  • Knowledge of accounting regulation issues
  • Strong understanding of the business industry
  • Good communications skills
  • Ability to independently make business decisions
  • Analytic skills

Professional Accreditations: Accounting Vs Finance

  • CPA ( Certified Public Accountant-US)
  • ACA/CA (Chartered Accountant-UK and Commonwealth)
  • ACCA( Chartered Certified Accountant-UK)
  • CTP( Certified Treasury Professional )
  • CPRM( Certified professional Risk Manager)
  • CF( Corporate Finance Qualification)
  • CQF( Certificate in Quantitative Finance)

Salary Potential For Accounting:

Average starting salary in the US for accounting graduates (2019 figures) in the US: $57,511.

Average postgraduate starting salary in the US: $69,605.

129th in PayScale’s ranking of majors by Salary Potential.

Salary Potential For finance:

Average starting salary in the US for finance majors (2019 figure): $58,464.

Average postgraduate starting salary in the US: $74,201.

63rd in PayScale’s ranking of Majors by Salary Potential.

Conclusion

A good thing to keep in mind is that despite the differences between accounting and finance, they are still corresponding fields. Therefore, many students choose to major in one and minor in the other or opt for a double major.

By fully understanding the differences and similarities between accounting and finance, I, therefore, hope you were or will make a better career choice. One that suits your skills, interest, and life goals. Good luck.

FAQs on differences and similarities between accounting and finance

What is the difference between Accounting and Finance?

The main difference between them is that finance typically focuses on planning and directing financial transactions for an organization. While accounting focuses on recording and reporting on that transaction.

Do I need work experience to apply for an undergraduate degree in Finance or Accounting?

In order to study accounting or finance at the undergraduate level, you don’t need to have relevant work experience. Nor an academic qualification specifically in accounting or finance.

Do Accountants make good money?

According to the U.S. Bureau of Labor Statistics (BLS) report, the starting salaries for accounting majors in the US averaged US$57,511.
While the accounting postgraduates, earn an average starting salary of US$69,605.
Actual wages might be higher or lower, depending on industry and location. But they are well above the national median average for occupations.

Which is better, Accounting or Finance?

Accounting careers typically involve analyzing and using financial information in order to evaluate a business’s financial position.
While finance uses this same information to project future growth and to analyze outgo in order to plan a company’s finances.
Therefore, both are all relevant in their scope. However, finance covers a wider spectrum.

References

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