Is accounting, finance & economics all the same kettle of fish? The truth, as often is, lies somewhere in between…
- Accounting is the same as finance
- Finance & economics are unrelated
- Finance, accounting & economics… what… ?! They’re all the same ain’t it?!
Accounting simply Defined
Recording & reporting past transactions
Trivia: Accounting may have predated or even sparked writing from the times of ancient Egypt where bookkeepers recorded grain in royal storehouses meticulously & accurately. The accuracy correlates to the severe & swift punishment on errors (Hey, maybe we should implement that again today!
Finance simply Defined
Managing money now & in the future
Trivia: The term “millionaire” first appeared in the book “Vivian Grey” by Benjamin Disraeli written in 1826
Economics simply Defined
Study of humans & choices
Microeconomics: individual, group or company vs Macroeconomics: country or region
Trivia: Bill Gates on average has earned $100k for every hour he has been alive…
Accounting vs Finance
Accounting is about the past while finance is about the future.
However both accounting & finance are concerned about assets & are often grouped together.
Finance vs Economics
Finance & economics are interrelated. For example, investors look at the economy because it influences markets significantly.
However, economics is more big picture while finance often focuses on companies, businesses & individuals.
I’m enlightened. Now how about Accounting vs Economics?
Accounting is based on set rules & principles while economics is based on assumptions to simplify complexity.
However, both accounting & economics help decision makers (for countries, businesses, etc) to make sound financial decisions.
How do I use this awesome info I have learnt?
- Read up about economics & finance. A good place to start is a business newspaper or business section in a paper (even if it doesn’t make sense at first, it slowly will start to)
- Spend time to think (or review) your life & financial goals. Know where you are in your financial plan. Work with a Personal Finances Advisor which will help you to achieve your goals (We’re not just saying this because we’re in this business!)
- Practice basic accounting to plan & work on your budget, income, risk, investment & retirement planning (
UseConsult your PF Advisor can help do some of the heavy lifting ;))
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