Any student of accounting faces the perennial problem and that is define his/ her subject to the fullest. Many may ask why? My simple answer to that- because of time. Time has changed the focus of this field and also expanded the field to the point of getting user friendly and all. Now you may get surprised to know that your perspective of accounting can be far outdated in line with the modern inflow. Take a look and compare:
“Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions—in making reasoned choices among alternative courses of action.”
“Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least, of a financial character, and interpreting the results thereof”.
“The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.”
And add to all that one more thing that is considered the modern touch or, “THE MIDAS TOUCH”:
The process is also responsible to make the communication of information and supply of it to the users of such information.
That’s why accounting now a days is called ACCOUNTING AND INFORMATION SYSTEMS rather than just plain accounting. See now why it is called the language of business?
Accounting Vs. Finance
It is only a question intended to shorten the credibility of accounting. Finance and accounting are far more different. Finance deals with the funds of the organization and accounting deals with the calculations and results. Finance works with accounts which accountants provide, so, it is impossible for a financier to work without the accounts information provided by the accountants.
On the other hand, the accountant will be out of his job or, may be out of the organization without the financing works in place. When there is no finance- there is no entity, and as there is no entity, there is no job for accountant.
So, it is the least to say that accounting and finance are related in a way that ensures the perfect running of the entity. If accounting is the machine, finance is the oil.