When planning their education, business professionals may have to consider the question of which field to pursue: finance or accounting. In simple terms, finance studies methods of planning for future finances, while accounting is oriented toward reviewing past financial decisions. Developing a more in-depth understanding of the finance vs. accounting distinction makes choosing between a master’s degree program in finance and one in accounting a much simpler process.
What Is Finance?
Finance is an academic and professional discipline that studies the management of large amounts of money, particularly the money of large organizations or governments. In this field, professionals learn how financial systems operate. Students of finance commonly look at how money is created and distributed, how banks function, and how credit works, among other concepts pertaining to financial systems. A large portion of finance is also dedicated to understanding how investments and assets affect financial systems.
There are three commonly recognized branches of finance:
- Public Finance. Public finance studies how government entities can organize their finances in order to keep the economy stable.
- Corporate Finance. Corporate finance helps businesses understand how to obtain financing in the form of equity investments, loans, or other credit arrangements. It also involves learning how to manage the debts associated with borrowing.
- Personal Finance. Personal finance relates to the purchase and use of consumer financial products, such as credit cards, personal insurance, and mortgages. A personal finance specialist would help his or her clients with filing taxes, planning for retirement, and developing a budget, among other money-related tasks.
What Is Accounting?
Accounting is an academic and professional discipline that revolves around recording and analyzing financial records. The purpose of accounting is to ensure that individuals and organizations are correctly managing their finances. This could mean a variety of things. For instance, professional accounting skills can be used to verify that a person has filed his or her taxes correctly. At a more advanced level, a large corporation could also use accounting to verify that its financial activity is in compliance with state and federal law.
There are several different branches of accounting, including the following examples:
- Financial Reporting. Financial reporting involves the process of producing and organizing a company’s financial statements to ensure that it complies with generally accepted accounting principles (GAAP).
- Management Accounting. Management accounting is more focused on collecting and recording financial data that can be used to improve the management of an organization. This could involve strategic tasks, such as creating a budget.
- Government Accounting. In this branch of accounting, professionals manage the financial records of public institutions.
- Tax Accounting. Tax accountants help their clients, whether individual people or businesses, navigate the tax laws of their respective jurisdictions.
- Forensic Accounting. Forensic accounting involves using investigative accounting techniques to settle disputes regarding finances. This branch is especially important in civil or criminal litigation when a forensic accountant must determine whether fraud occurred in a financial situation.
Finance vs. Accounting: Education
Pursuing a postgraduate education in one’s field of choice can often accelerate career advancement. For individuals hoping to further their careers in asset management, a Master of Finance or a Master of Accountancy may be a lucrative option. Although the differences may vary from school to school, a master’s finance program will take between one and two years of full-time study to complete, usually falling at about 1.5 years. A Master of Accountancy, on the other hand, will usually take at about one year (three semesters) of full-time study to complete.
Finance vs. Accounting: Careers
There are many options for educated professionals in both fields, but accountants may have an easier time finding work and advancing their careers. This is because accounting is a more diverse field of study than finance. In fact, accounting students often learn briefly about some of the concepts that are commonly used in finance jobs. This means accounting graduates may be able to qualify for a wider range of positions than their finance graduate counterparts.
Professional accounting is a necessary component of any revenue-attracting organization, because accountants help companies avoid making costly mistakes in their financial records. Finance management may be important for larger organizations, but there is often little need for this skill set in instances where large volumes of money are not being allocated. By earning a Master of Accountancy, professionals may have a greater chance of obtaining a rewarding job as an accountant or in another asset management-related area.
Find out more about how Ohio University’s online Master of Accountancy program strives to prepare students for success as financial professionals in today’s competitive landscape.