Abstract
A largely accepted language is required for a business or organization to effectively
communicate its results and position to stakeholders, which is why accounting has come to
be known as the “language of business”. Accounting is really the means for providing
financial information to others. Financial analyst then take the data the accountants have
compiled in the form of reports, and make educated guesses at what their company should
do next. David ballast (1996) stated, The fact remains that accounting and finance are the
primary tools for reducing business problems and opportunities to a common denominator,
setting goals, measuring results, and making decisions. (p. 1)
Accounting & Finance
Distinguishing between Accounting & Finance
Both accounting and finance deal with money and assets; however, they are categorically
different concepts. This portion of the essay will discuss the dissimilarities between
accounting and finance. Examples of different concepts will be given for both practices.
Accounting as a discipline is more of a law, whereas finance is more of a theoretical
practice. Accounting has clearly defined guidelines, rules and regulations. As defined by
Wikipedia (2005), accounting is the measurement, disclosure or provision of assurance
about information that helps managers and other decision makers make resource allocation
decisions.
Two key disciplines in accounting are financial accounting and auditing. Financial
accounting involves processes by which financial information about a business is recorded,
classified, summarized, interpreted, and communicated (Wikipedia, 2005). Auditing is a
related to financial accounting, but it is a separate discipline. Auditing is the process
whereby an independent auditor examines an organizations financial statements in order to
express an opinion that conveys reasonable but not absolute assurance as to the fairness
and adherence to generally accepted accounting principles. (Wikipedia, 2005)
As previously stated, finance as a discipline or a science does not have clearly defined
guidelines and/or regulations, but is more of a theoretical practice. Finance is defined as
the management of money, banking, investments, and credit (The American Heritage
Dictionary, 2004). It manages the ways in which individuals, businesses, and organizations
raise, allocate, and use monetary resources over time, taking into account the risks entailed
in their projects (Wikipedia 2, 2005).
Brealy, Myers, and Marcus (2004) suggest, Financial decisions are rarely cut and dried,
and the financial markets in which companies operate are changing rapidly (p. VII).
However, Donald MacKenzie (2004) suggests, over the last fifty years, the academic study
of finance has been transformed from a largely descriptive, non-mathematical enterprise to
a highly analytical one in which sophisticated mathematics is deployed (p. 4).
