Accounting and finance degrees have so much in common that many students have a hard time choosing between these majors. Even compared to general business and business marketing, these two math-focused business majors are associated with higher wages and lower rates of unemployment and underemployment, The Washington Post reported. Beyond these shared benefits, however, there are important differences between accounting and finance degrees. The benefits of choosing accounting over finance include differences in what you will study in college, what job opportunities await you after graduation and what professional credentials you may choose to pursue.
Focus on Financial Reporting Over Risk Management
Both accounting and finance degree programs include a general business core that introduces students to the foundation of a breadth of business subjects. When it comes to major coursework, though, the academic focuses and skills needed in finance vs. accounting degree programs are different.
While an aspiring accountant or auditor must focus primarily on learning the skills of accounting, or financial reporting, a finance major is more concerned with cultivating skills in financial analysis. There are certainly some overlap in the skills needed for each education and career path. Finance majors do need some accounting and financial reporting skills, and majors in both programs of study will cover coursework in budgeting. However, accounting students spend more time studying balance sheets and other types of financial statements, account reconciliation, month-end close processes, maintenance of the general ledger, the Generally Accepted Accounting Principles (GAAP) they will need to follow in their future careers and the broad field of public accounting. On the other hand, finance students spend more time studying economics, forecasting, financial planning, financial modeling, variance analysis and statutory accounting principles (SAP).
What does this mean? In general, accountants serve the more straightforward role of reporting financial data. They may need to interpret that data for purposes such as helping companies improve business operations and profitability or helping clients save money, but they typically work with known values such as debits and credits found in the general ledger. Finance professionals, on the other hand, must work with the unknown, a requirement that involves risk. Undergraduate finance courses such as Corporation Finance, Investment and Portfolio Analysis, Intermediate Financial Management and International Finance often focus on managing and minimizing risk and maximizing returns on investments.
Some graduate finance programs, which are often more specialized than undergraduate programs, focus on the narrower subject of financial statistics and risk management.
Less Analytical and More Technical Skills
Both accounting and finance careers require strong analytical and math skills to be successful, but the level of skill you need may differ. The United States Bureau of Labor Statistics (BLS) reports that although accountants need math skills, “complex math skills are not necessary.” Accountants work primarily with analyzing debits and credits, which take the form of simple addition and subtraction, usually with the help of a calculator. More than anything else, accountants need to be comfortable working with numbers, including percentages, fractions and decimal points. One course in a subject like applied calculus or business calculus is often all the true math coursework that is required in an accounting program.
Math and analysis courses are somewhat more important for finance majors. They need to reliably predict financial trends, and that requires a solid understanding of the numbers behind those trends. You may need to take more math courses or simply more higher level math courses and courses that focus on analysis. For an undergraduate finance degree, that might mean algebra, calculus and statistics. At higher levels of study in finance, you may feel like you are studying mathematics more than you are finance principles and practices. On the other hand, accountants, especially at the graduate level, typically focus on learning more advanced or specialized skills in financial reporting.
Although some of the curriculum of a graduate-level accounting program may focus on concept and theory, much of it focuses instead on applying advanced financial reporting principles.
Opportunities Outside of Investments
If your education and career path takes you into the field of finance, there’s a good chance you will be working with investments in one capacity or another. Financial analysts, personal financial investors and financial managers all routinely handle investments as part of their job description. In fact, 51 percent of personal financial advisors and 24 percent of financial analysts work in the industry of securities, commodity contracts and investments, the BLS reported. Finance job opportunities outside of investment banking and investment management don’t fit into the traditional roles for a finance major and can be harder to find, though some – like financial officer in a military branch or nonprofit analyst – can be very fulfilling.
Accounting is a broader field of business. Many accountants are public accountants, handling tasks such as tax form preparation, balance sheet creation, annual report filing and other work that involves financial statements required by law. In private accounting, you report on financial data for internal use. Within this field are opportunities such as cost accounting, which is closely related to budgeting, and management accounting, which offers professionals the opportunity to work with company leadership and influence business operations. Still other accountants are self-employed or work for a law enforcement organization or another government entity.
With an accounting background, you can also go into auditing, the field that involves examining financial documents for accuracy and signs of fraud, mismanagement or opportunities for improvement.
Benefits of the CPA Over CFA Credential
Both accountants and finance professionals often benefit from having a professional certification. The Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) are the most sought-after credentials. Both credentials are difficult to obtain and confer a great degree of prestige, but the CFA often takes longer and costs more to attain.
If you’re looking for prestige among the general public, the CPA license is the more widely recognizable credential for those outside the field of business.