Accounting vs Finance

Accounting Vs Finance

The basic difference between accounting and finance is a little bit tricky. While finance is about planning and managing the money to earn returns, accounting is about tracking the financial transactions of an individual or an entity. 

From the above picture, the farmer is actually using his money to buy seeds from the dealer. Now, both the farmer and dealer will record this transaction. While farmers record this transaction as an expense for buying seeds, Dealer records this as revenue for selling seeds. 

Now, what if the farmer doesn’t maintain any records of his financial transactions. So, lack of information on past financial transactions is the major limitation for banks or other financial providers to extend finance for farmers or any other businesses. Thus, accounting is an essential aspect of understanding financial health and for the planning of a business.