Why do people say “Accounting people can do Finance, but Finance people can’t do Accounting.
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The simplest terms?
Finance is investing money in different accounts or stocks.
Accounting is keeping track of investments, sales, loses, expenses, taxes, write offs, accounts receivable, accounts owed, and a bunch more things.
So accountants absolutely have the skills to do the investments and management that fiancé people do.
But finance people don’t deal with paychecks and expenses and taxes , finance people don’t have the balance the books of a business, accountants do.
If you are trying to select a degree, I think a major in accounting with a minor in finance would be more marketable. Finance jobs will accept accounting majors but not the reverse usually.
> Why do people say “Accounting people can do Finance, but Finance people can’t do Accounting.
Accountants say that, because they are envious of higher salaries and glamour of Finance.
But they are two different fields, even if they work closely together.
Finance decides what to do with money (or how to get more money). Money can be invested into stocks and bonds, or into acquiring other companies, or expanding operations inside the company, or building up a new product. Money sources are profits (if any), issuing stocks or bonds or private equity or bank loans.
Accountants record and implement decisions made by Finance people. They also act as quality control, i.e. make sure Finance people do not run the company into the ground.
“Accountants can do Finance” is like saying that manufacturing workers can design products that they make. They sure can come up with a new design, but there is no guarantee that buyers will like it, or it will pass quality checks.
They’re very separate disciplines at the end of the day. Financial Accountant’s do occasionally need to prep ratios and some of that is in common with Finance and Finance draws from Accounting figures but there’s less common ground than what you would think. Btw Accounting and auditing is so boring that when you are studying you definitely need something else to keep you interested… and that doesn’t change when you get to the workplace.
If you’ve studied purely Accounting courses then you will have learnt how to do specific financial ratios. But the courses don’t teach you any decision making.
Finance is ultimately about taking data (from already prepared sources) and being able to make decisions. Although you need to understand what the summarized data means you don’t have to have any knowledge of how that data was prepared or what checks are in place in your accounting systems.
There is some overlap in the two fields in the form of Cost and Management Accounting. While Financial Accounting is regarded as backwards looking Cost and Management Accounting is current looking and then Finance is future looking.
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