August 28, 2017
The main difference between finance and accounting is that finance can be thought of as the more general subject of the two areas, while accounting is specific to its practice.
Many undergraduate business programs are based on a foundation of what are known as the FAME subjects: Finance, accounting, management and economics. Business students will gain a good working knowledge of all four subjects, but some may wish to specialize within one of these areas.
Two common areas where students may choose to focus or pursue further education are finance and accounting. These areas have several elements in common, and are often grouped together, so people who have not studied business may wonder: What exactly is the difference between finance and accounting?
Between finance and accounting, finance can be thought of as the more general subject of the two areas. The study of finance provides students with a strong foundation of knowledge of banking, economics and financial markets. If you choose to concentrate on finance, your coursework will explore topics in corporate finance, private equity, venture capital, financial planning, risk management and more. A significant focus will be the study of markets, how they function and fluctuate, and how to wisely and effectively manage and mitigate the risks inherent in investing.
Future businesspeople studying finance will have the opportunity to build skills in communications, quantitative analysis and best practices for the industry. Successful professionals in finance understand the stock market and other types of investments and are skilled at understanding and interpreting mathematical and statistical data. Quantitative skills are important, but so are good communication skills, knowledge of human behavior, and the ability to work effectively as part of a team.
Studying accounting prepares you for a career in the accounting field, or one of the many adjacent career paths. Common course content in an accounting undergraduate program covers financial accounting, tax accounting, management accounting and forensic accounting. Students will also study business strategy, risk management, information systems, quantitative analysis and more. Successful students should gain an understanding of the current regulatory and business landscapes and a good "big picture" knowledge of the business world, according to the American Institute of CPAs.
Education in finance opens doors to many business careers. People holding degrees in finance go on to work in banks, hedge funds, and investment firms, among many other settings. Finance can be a pathway to becoming a financial consultant or personal financial advisor. Certified Financial Planners (CFPs) must pass the CFP Certification Exam once they have completed their education coursework. Financial analysts and managers are needed in almost all types of businesses, from family-run local businesses to a global corporations.
This flexibility makes finance an excellent choice for students who want a smart educational investment. According to the Bureau of Labor Statistics, employment in business and financial jobs is expected to grow about 8% by 2024, totalling around 632,400 new jobs between 2014 and 2024.
Accounting is a bit more specialized as a field, although, as with finance, there are accountants and people with accounting backgrounds working in all types of businesses and organizations. The most obvious and well known career path is to become an accountant, a job that may require a trainee period, further education, certification, or a combination of these. You can become a professional accountant with a four-year degree in accounting or even a general business degree, though a firm may wish to have you do on-the-job training or education. Most states require you to have 150 hours of college coursework before you can take the Certified Public Accountant exam, which is 30 hours more than a typical four-year degree, according to BLS.
Studying accounting can lead to more specialized accounting roles, such as actuary, auditor or financial examiner. People with backgrounds in accounting can also be frequently found working as bookkeepers, tax advisors and payroll administrators (AICPA). Other roles include working for government agencies, as an internal or external auditor examining an organization's finances for cases of waste or fraud or an information technology auditor evaluating a company's computer system controls to ensure financial data is reliable, according to BLS.
Accounting is a smart choice when it comes to job prospects in the future. According to the Bureau of Labor Statistics, employment of accountants and auditors is anticipated to grow 11% between 2014 and 2024, which is faster than the average for all occupations. Accountants are in demand when the economy is strong, because economic health and growth means that more people are needed to manage and oversee financial records. A stronger regulatory environment is also good news for accounting job prospects, because as regulations tighten more people are needed to enforce them.
Many jobs in finance and accounting will require a four year degree. There are also many more advanced degrees and certifications you can earn over the course of your career if you wish to gain a more specialized or in-depth understanding of your field. In finance, there is the Master of Science in Finance, the Master of Financial Economics and the Master of Applied Finance. In accounting, you can pursue degrees including Master of Accounting, Master of Professional Accounting or a Master of Science in Accounting. Additionally, people who studied finance or accounting are well-prepared for Master of Business Administration programs, many of which offer concentrations in finance or accounting.
Susan Bogle is a marketing and student recruitment specialist in higher education. Follow her on Twitter @Suze1776 or connect on LinkedIn.
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