Confusion of accounting and finance ?? are they same??

The answer is no.

they both are different here is why :

Well, this really is a question that must be asked by every student to a professor, to a practitioner, to a professional.

Basically, Accounting is recording of transactions and computing the working results (P&L) and state of business on a date (Balance Sheet). It generates records and statements that are useful for

Management - for the purpose of planning and strategizing

Finance, cost and other dept. - for budgeting, cost reduction and effective management

Share holders - to make them aware of where their hard earned invested money is being directed and ascertain what gains they have made.

Valuers - to judge the value of business

Stakholders like creditors, debtors - to judge the credibility, and frame credit policy for the entity

Tax authorities and govt. - To allow them scrutinize the tax collections and provides a base in case of tax evasion and a base even in case of compliance doubts of dept. It supports the claims of the entity.

It is rightly called as language of business and considered as heart of business as it provides information to various users from time to time for different versatile purposes. It is a function / process. that has to deal both with internal members of entity as well as external stakeholders of the company and communicate with them on a regular basis.

On the other hand, Finance is an Operation like Sales, Purchase, HR, Finance dept. of a company is dependent on accounting records and reports. They along with top management, accounts, and other operation heads, discuss, figure out and plan for the future of the company. Finance dept. has to ensure that the company’s existing finance is safeguarded and generates active/passive returns whereas additional finance for working capital, new and existing projects is raised at the lowest cost. Thus they need to work on multiple domain too, like investment opportunities and threats, Financing opportunities and threats, Budgeting, Finance and budget controlling and so on.

Both Accounts and Finance Jobs actually are analytical, though many don’t understand this and feel so.

Accountants have to ensure that whatever is recorded is supported by paper evidence. They have to ensure that there is strict control, authorization and internal check each transaction before recording and during recording. They have to do various computations and provide various reports like:

Expense report, Debtor’s report, Tax reports, Sales reports, creditor’s report and also mark out where according to them, un necessary expenses are being incurred by the company.

Accountants are further judged by the auditor’s comments and reports. Their performance is judged by management, auditors, stakeholders from time to time.

Finance dept. on the other hand reviews those reports, conducts their own analysis to sketch out options available.

the entire business strategy is dependent on 3 major steps, Learnings from Past experiences, Present positions, Future planning.

Accountants lay out all data and information for all the three steps.

Finance people look at present and plan future.

An accountant has to deal with Last year, Earlier year tax assessment and workings required to settle legal disputes, current year accounting and making provisions payments in next year for expenses of this year. Thus though on face one may see an accountant working on data of present year, they actually have to deal with multiple year data.

A finance person is concerned with Last year’s data, current year’s data and makes estimates for next coming 3–5 years to ascertain future positions to seek finance, they along with top management and other operations dept., work out on future strategies that they think will materialize the forecast made by them.

In summary:

While Finance is all about dealing with surplus money for investing and making maximum returns and seeking finance at minimum costs,

Accounting provides the data for Finance planning, funds available at any point of time with the entity, and effectiveness of strategies and plans applied in a year. It shows you the mirror.