Relationship Between Accounting and Financing

Stephen Shepard

13 September 2013

HCA-240

Trizia York

Accounting and finance are often thought of as closely related fields. Each is required to make sure an individual or an organization stays in the green. Both accounting and finance deal with the organization money in a way that is hopefully profitable, but how are they different?

Dictionary.com defines accounting as, “a detailed report of the financial state or transactions of a person or entity.” (CITE DICTIONARY.COM) This detailed report shows you how you personally or an organization is managing their money. Think of accounting as bookkeeping. It allows you to analyze the financial position of yourself or an organization. It allows you to see when and how you need to redirect cash flow so that you can come out on top and not in the negative. (CITE DICTIONARY.COM)

Financing is, “the monetary resources, as of a government, company, organization, or individual.” (CITE DICTIONARY.COM) Financing is, basically put, the actual use of money. It is the conducting of a transaction that deals with money. It is the management of an individual’s or organizations actual pocket book. (CITE DICTIONARY.COM) In finance you will also find ways to generate money for future products, utilize resources, and effectively deliver a good or service so that you, in turn, make a profit. (CITE LETSLEARNFINANCE.COM)

Now that we have defined both accounting and finance you can easily see how the two are closely related. Without accounting, finance would surely fail. Here is an easy example. You are in the financial department of a hospital where they are trying to generate funds to add on a new stem cell research facility. You get quotes to build the facility and find that you will need an estimated $250,000 in order to build the facility. You come up with the several fund raising ideas to start earning money towards the facility, but how are you actually going to track your earnings? On top of organizing ways to get money...