The difference between Accounting and Business finance |
Well, Accounting - deals with collecting, analyzing and communicating financial information. As you might have already guessed, such information is critical to those tasked with running the business for decision making. Such information is useful in deciding whether to borrow money to help finance the business, increase and or decrease price and quantity of existing products, etc. For people outside of the business (shareholders, creditors and owners), such information to decide whether to invest in the business or walk away, lend money to the business or even whether to enter into purchasing agreement or not. Finance like accounting is used to help decision makers. They are however different, finance is more concerned with how business funds are raised and invested. Finance is also concerned with understanding the risks associated with the investment as well as the returns from such investments. All in all, the two areas overlap over a large range of issues. They are both critical to successful business operations and in many cases draw from the same information source or complementing sources. For Accounting and finance information to be useful, it has to be reliable, relevant, be easy to compare against previous data, be easy to understand; otherwise it means nothing to your business. In real world, every business has to be able to identify relevant information that drive their business processes, accurately record and store the information, perform desired and relevant analysis and report the findings to different stakeholders including business decision makers. Providing misleading information to investors is a punishable offence and has severe consequences for your business. |
RELATED ARTICLES:
Accounting Terminology
Sales and revenue mean the same thing. This is money that comes from customers. Profit, Earnings and income also mean the same thing. This is money left after subtracting expenses and costs. This is also referred to as "bottom line". Note: Cash is
Introduction to Accounting
The Accounting process
In general terms, the accounting process is a series of activities that starts with a transaction entry and ends with the closing and balancing of the books. This process is recycled over a period of time, usually a year. During that period, accountants are required to ide
Introduction to Accounting
Accounting can be defined as "a means of communication among all segments of the business". It provides reliable or at least relevant financial information useful for making business decisions. Main users of accounting information are external users such as investors and owners, cre
How to measure your business financial position and performance
As mentioned in the previous postings, accounting comes in two forms: Financial accounting - which is concerned with providing the overall financial picture of the business' financial position and performance. and Management Accounting - which is conc
Business finance - Basics
Anyone who runs a business will tell you that you can not start a business with nothing. Every business is started with money or something with a monetary equivalent. Suppose you decide to start a business to produce and sell fresh vegetables. To do this, you either hire people to hel
What the cash flow statement tell us
The cash flow statement is a financial document that shows how changes in balance sheet and income statements affect cash and cash equivalents. As an analytical tool, the cash flow statement is useful in determining the short-te
The balance sheet
In business, money is never created. It is either earned or spent; and as such every penny should be accounted for. The basic law of accounting states that value to the owners include, what the business have less what the business owe to others people, vendors and/or banks. In account
Controlling cash flow problems
Cash flow refers to the way cash moves in and out of the business. In general, cash comes in when customers buy the products and services, and moves out of the business when you pay your debt to banks, suppliers and utility bills. As you can already see from this, a few things have an impact on your
Cash Flow
Cash flow is loosely defined as a measure of the business' ability to generate and spend money. This in the process determines the value of that business. Obviously a business with more cash outflow than cash inflow is a loosin