About the expert
He earned his PhD in accounting at University of Alabama.
Question #1: Many students initially aren’t sure about the differences between accounting and finance. In your opinion, what is the primary difference between the two?
“Finance and accounting are two halves of the financial book. Perhaps the simplest way to differentiate the two is that accounting is more focused on the past and finance is more focused on the future.
Accounting is a system for the delivery of financial information. It involves the recording of transactions and preparation of the financial statements, along with financial statement analysis regarding financial health of firms. Accountants are tasked with ensuring that events have been accurately recorded and that the financial statements accurately reflect the financial condition of the business.
Finance takes the organized information provided by accounting and uses it to help run a company on a daily basis and make long term financing and budgeting decisions. Finance is dedicated to ensuring that there will be sufficient cash flowing into a business in the future to achieve the goals of the business. Because Finance deals with the future, it must deal with risk and uncertainty. Anticipating, evaluating, and managing these risks and uncertainties is a large part of the responsibility of financial managers.“
Question #2: How might these differences affect student’s education and career paths after graduation?
“Students in accounting are preparing to enter careers which will lead them into public accounting, private accounting, or governmental organizations. From the smallest start-ups to large corporations, everyone who keeps financial records or pays taxes requires the skills of an accountant.
In Public Accounting (CPA firm), students can specialize in: Auditing, Taxation, Management Consulting Services, Forensic Accounting, Litigation Support, Financial Planning, and Business Valuation.
Private Accounting (working in business, industry, or non-profit organizations) gives students careers opportunities in: General Accounting, Cost Accounting, Taxation, Internal Auditing, Computer Systems Analyst, Security Analyst, and more.
Local, state, and Federal governments need accountants in many different agencies: Federal Bureau of Investigation, Internal Revenue Service, General Accounting Office, and many others.
Students in Finance are preparing for careers in areas such as Financial Planning, Corporate or Public Finance.
In Financial Planning, financial advisors help individuals make decisions about things like: paying for education, financing a home, buying insurance, and investing or saving for retirement. Students may find careers in banking, real estate, insurance, or as a Certified Financial Planner (CFP).
Corporate Finance is all about managing a company’s sources and uses of cash to maximize the value of the company and protect against financial risk. Students can find careers with any organization that has to borrow or invest funds: large and small businesses, non-profit organizations, hospital, etc.
Public Finance is concerned with the financial dealings of states, as well as related public entities such as school districts or government agencies.“
Question #3: What do you think are the skills that are the most important for accounting or finance majors to be successful in their respective careers OR educational careers?
“Both accounting and finance majors need to develop technical skills (computer applications, statistical analysis, etc.) but beyond that they need: analytic and critical thinking, ability to collaborate, effective communication (of results of analysis and implications). In both areas, it is important to be able to explain complex situations so that the appropriate decisions are made.“
Question #4: What advice would you give to students preparing for the CPA or CFA exam?
“With either exam, the students should recognize that preparing for the exam is a investment of time and that it won’t happen overnight. During the first semester of the junior year, students should review past exams to become familiar with the content and format. All business courses should be treated as preparation course for the certification exams to learn as much of the exam content as possible. Most students take a review course that will prepare them for the exam by reviewing materials taking practice exams. Students should take the exams as soon as possible after graduation while they still have their study skills and have not forgotten the materials studied in their classes.“