What's the Difference Between Accounting and Finance?

While finance and accounting intersect, finance is more analytical and future-oriented, while accounting is more rules-based and retrospective. The two fields' purposes also differ. Finance seeks to identify value-building opportunities. Meanwhile, accounting concentrates on reporting a company's current financial situation.

Both specializations deal with technical aspects of money management and require strong attention to detail. The U.S. Bureau of Labor Statistics also anticipates faster-than-average job growth for both accounting and finance professionals. However, accounting may have an edge due to an industry-wide shortage of qualified workers.

Understanding the similarities and differences in finance vs. accounting can help you make informed educational and career decisions. Explore the sections below for insights that could help you identify the right path.

Defining Finance and Accounting

Finance: Finance professionals analyze both internal and external data with the general goal of identifying growth avenues and efficiency improvements. They source, allocate, and manage investment capital and seek to optimize the value and deployment of financial proceeds from business activities.

Accounting: Operating within confined principles, accountants compile, organize, and communicate internal financial data. Accounting applies a retrospective viewpoint in delivering financial information and seeks to provide tangible, relevant insights. As a primary goal, accounting also seeks to specify the remaining financial value after addressing all existing liabilities.

Key Similarities

Finance and accounting both have broad relevance in the public and private sectors. Professionals in both areas require advanced knowledge of technical concepts and sharp attention to detail. In addition, both seek to identify and address money-related risks while working to improve their employers' long-term financial health.

Skills that transfer well between the two areas include:

Both business disciplines can also benefit from knowledge of generally accepted accounting principles, which is required for many roles — especially in accounting.

Key Differences

• Finance: In scope, finance draws on the present but primarily looks toward the future. It tends to focus more on available cash and cash equivalents, since these assets are the easiest to deploy for future gains. Furthermore, finance professionals focus on forward-looking strategies like managing a company's credit, equity, and access to capital. To these ends, they emphasize managing and protecting available cash flow to ensure a company's growth.
• Accounting: In scope, accounting draws on the past and primarily looks to the present in delivering a snapshot-style summary of an individual or organization's financial situation. Accounting more broadly incorporates elements like credit, accounts receivable, and payment deferrals, focusing on overall recognition of revenue and expenses, along with proper record-keeping.

Comparing Education Requirements

In general, finance and accounting professionals need bachelor's degrees. Graduate degrees, including master's in finance and master of accounting degrees, may support your advancement. You can also pursue a specialized MBA in accounting, finance, or another relevant area.

The following subsections explore additional, discipline-specific educational paths:

Finance

While some schools offer bachelor's programs in finance, many aspiring finance professionals study business or economics as undergraduates. A bachelor's degree in mathematics or statistics can also build a relevant knowledge foundation.

Accounting degrees can also transfer to finance, but accounting programs heavily emphasize discipline-specific concepts and technical skills. Thus, you may extract more value from a business, economics, or finance degree.

Graduate programs develop advanced and specialized skills that may facilitate career entry and advancement. Master's in finance programs represent an increasingly popular alternative to MBAs. Compare master's in finance vs. MBA programs to help you decide which option better aligns with your learning objectives.

Accounting

Differences in finance vs. accounting are readily apparent when considering educational pathways, as schools offer accounting-focused degree programs at all levels. These include pre-degree accounting certificates, associate and bachelor's degrees in accounting, and various master's programs.

Earning a master's degree can help you qualify for advanced accounting careers with licensing or certification requirements. Your options include:

• Accelerated accounting bachelor's-to-master'sprograms
• Master of accountancy or master of science in accounting programs
• MBAs with an accounting specialization

While practicing professionals rarely hold terminal degrees in the field, a doctoral degree in accounting is another available option.

Certification Differences

Finance and accounting professionals can pursue additional credentials, including licenses and certifications. These may enhance your credibility while potentially expanding your employment options.

While you can hold both finance and accounting certifications, such credentials are generally specific to one discipline or the other. The subsections below introduce and explore some of the pathways you can follow in finance vs. accounting:

Finance

Finance certifications are generally optional, though some employers may prefer or require them for certain positions. Leading providers include organizations like the CFA Institute, the Corporate Finance Institute, and the Financial Management Association.

Most professionals pursue certification after gaining multiple years of professional experience, as certification exams tend to test theoretical and practical knowledge.

Some of the certifications you can pursue include:

• Certification in Risk Management Assurance
• Chartered Financial Analyst
• Financial Modeling and Valuation Analyst
• Financial Risk Manager

If you want to work in personal finance, you can also pursue a certified financial planner credential in addition to any licensing requirements that may apply in your state.

Accounting

While you can work in accounting without a license or certification, professionals without credentials may have limited advancement options.

To enhance your career prospects, consider earning a certified public accountant (CPA) license. States issue these licenses, and requirements vary among jurisdictions. You can generally pursue licensure with a bachelor's degree, 1-2 years of qualifying work experience, and passing the CPA Exam.

Organizations like the Institute of Management Accountants, the Institute of Internal Auditors, and the American Institute of Certified Public Accountants offer optional credentialing programs. Examples of their certifications include:

• Certified fraud examiner
• Certified in financial forensics
• Certified internal auditor
• Certified management accountant

You can also earn certifications in bookkeeping if you plan to pursue a support-level accounting career.

Career Paths in Finance and Accounting

Roles common to finance and accounting include entry-level financial operations assistant jobs. Finance and accounting majors can also pursue career opportunities in actuarial science.

At higher levels, careers become more specialized, making it difficult to transfer between finance and accounting roles. The chief financial officer position marks the apex of the finance and accounting tracks as a notable exception.

Explore below to learn more about discipline-specific career paths:

Finance

Corporate and government finance careers often follow a hierarchy. This structure begins with clerks and assistants, then moves up to budget analysts and financial analysts before reaching the financial manager level.

Finance professionals may also work in investment banking, as personal or corporate financial advisors, or in specialized roles like:

• Credit analyst
• Investment analyst
• Portfolio manager

While accounting professionals can also rise to the C-suite, finance professionals may more readily qualify for chief investment officer (CIO) roles. CIOs share the analytical, forward-looking orientation common to many finance roles and are typically found in corporations with more complex investment strategies, such as investment firms, pension funds, or large corporations with in-house investment teams.

Accounting

Accounting-specific careers include other specialized roles beyond CPAs. For accountants, these include job titles like:

• Operational accountant
• Payroll accountant
• Staff accountant
• Tax accountant

In comparing finance vs. accounting, you will also find multiple anti-fraud and compliance specializations. Examples include internal auditors and forensic accountants.

If you would like to combine accounting expertise with business management, consider becoming a certified management accountant. This path emphasizes managerial accounting, which uses financial data to guide organizational decision-making.

You can also open a private accounting practice and offer your services to individuals and businesses. This path is less readily available in finance, which usually operates as an internal division within a larger organization.

Should You Pursue Accounting or Finance?

Given the overlap in finance vs. accounting, you may be unsure which area of business to pursue in your education or career. Consider these questions to help you decide:

Questions About Finance vs. Accounting