Due to the immense importance of the FAME (finance, accounting, management, and economics), you must be familiar with their essential role in running and managing all-size businesses and organizations. No matter what industry, no company can survive without its finances and accounts department.
Finance and accounting share the same core as these subjects deal with tracking and organization of financial information, transactions and cash management. Furthermore, these disciplines are interrelated. For instance, a financial advisor has to rely on data compiled by an accounting professional and vice versa. The primary difference lies in the subject coverage. Finance has a wide-ranging approach covering a variety of specializations in the fields of business, baking, and economics. On the other hand, accounting is comparatively narrow in approach.
Let us understand the key differences between finance and accounting subjects that would help you choose the right specialization.
Understanding Finance Vs. Accounting
Finance particularly deals with the financial performance of the organization in the future. It may include long-term financial goals and projections, forecasts of fiscal performance, growth planning strategy in the future, and allocation of assets and liabilities. Moreover, finance focuses on capital management and cash flows.
Accounting informs you about the financial position of an organization by creating a true reflection of fiscal activities. It handles data to compile financial analysis reports, monthly, quarterly, and annual budgets, cash flow analysis. Accounting deals with financial operations daily and presents financial information to all stakeholders.
How to Select Finance Vs. Accounting Specialization?
It is important to understand the skills required for finance vs accounting subjects to perform efficiently after selecting the right major.
A finance major requires strong research, analytical and communication skills, an excellent grip of theoretical concepts, knowledge of the latest trends in business practices and industry principles, and the ability to interpret and generate meaningful results from statistical and numerical data. A student must have an interest in trade, investment and the stock market to get enrolled in a finance major. Students who lack a mathematics background and financial skills should not opt for this major.
On the contrary, the basic skills required for accounting majors include quantitative skills, knowledge of GAAP (generally accepted accounting principles), accounting regulations, and a strong understandingof accounting concepts and techniques. You must have an interest in getting yourself updated with the business world. You don’t have to be a pro at mathematics if you want to pursue accounting.
Simple mathematical operations like addition, subtraction, multiplication, and division can work. Mainly, accounting is hard to grasp for those students who face difficulty learning accounting concepts and techniques.
Finance Vs. Accounting Degrees
Finance degree specializations including corporate finance, behavioral finance, financial evaluation, financial modeling, derivatives, econometrics, capital markets, quantitative finance, financial reporting, financial regulation, and investment management. These specializations are part of a program of educational degrees at the undergraduate level.
Other programs include banking, financial management, international finance, risk mitigation, financial planning, and financial engineering. On the flip side, accounting subjects are auditing, budget analysis, business strategy, financial accounting, risk assessment, tax, management accounting, and international accounting. Some notable mentions include forensic accounting and information systems.
Graduates of finance and accounting majors are highly sought-after. According to the United States Bureau of Labor Statistics projected data, the job opportunities for accountants and auditors are likely to increase by 10 percent up to 2026. Similarly, employment opportunities for financial analysts are expected to grow by 11 percent in a similar period.
Notable finance professions include:
- Financial manager
- Financial consultant
- Commercial banker
- Investment banker
- Financial trader
- Insurance officer
- Hedge fund manager
- Quant specialist
Accounting professions are following:
- Accountant (trainee, professional, public, and certified)
- Budget analyst
- Credit controller
- Financial examiner
- Forensic accountant
- Payroll administrator
- Tax advisor
Experts have predicteda vast growth of finance-related jobs in computer systems design, management, technical and scientific consulting services sectors. Tax preparation, payroll services, accounting, bookkeeping are the expanding career options in the accounting field.
The average salary of a bachelor’s degree holder in finance is $73,000 a year. While considering all careers at the undergraduate level, the median salary lies at $61,000. For some professions, for instance, financial consultants earned a median salary of $83,660 per annum in 2020. This salary is applicable for bachelor’s degree holders.
Accountants and auditors earned a median salary of $73,560 per annum in 2020. This salary is applicable for bachelor’s degree holders. It is worth mentioning here that higher educational degrees like postgraduate and Ph.D. can raise the bar of financial growth in these majors.
Remember that finance and accounting offer plenty of job opportunities in various sectors and industries. Still, getting a job is extremely competitive in these fields. The choice of the right educational degree and specialization can prove beneficial for you in the long run regarding career prospects. You can go for highly in-demand sub-specializations in these subjects that can help you stand out among the crowd of graduates.
Krishna Murthy is the senior publisher at Trickyfinance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.