ZACH DE GREGORIO, CPA
www.WolvesAndFinance.com
A description of the differences between the two subject areas of Accounting and financial. There is a lot of confusion about the difference between these two fields. In enterprise school, Accounting and financial are two separate areas of study. They use two different tools and skill sets to accomplish their goals. These are pretty large generalizations, but it is valuable to understand the distinction between the accountant role and financial role in an organization. Accountants are primarily concerned with a goal that is historical looking. In financial, the goal is future looking. The goal of Accountants is to create a set of financial statements that represent the financial standing of a enterprise at a point of time. They are concerned with all the historical economic activities that have led up to this point. financial starts with the financial statements from the accountants. financial is then concerned with defining their assumptions about the future, and that informs the enterprise decisions on how to best use the available cash in the best way for the future. The reason this is important is because it informs two different definitions about uncertainty. Accountants and financial professionals are talking about two different things. Accountants are concerned with material misstatements. They are trying to minimize that uncertainty as much as possible. financial people have a different relationship with uncertainty. They embrace uncertainty, because there is always an element of uncertainty when you deal with the future. financial is concerned with the variance between the assumptions and what actually ends up happening. uncertainty is very important to financial professionals, and uncertainty plays a big role in determining valuations. For a financial person, it becomes about managing your risks. This description is focused on working in a corporate environment. Investing, on the other hand, is a unique area of financial. But investing still deals with managing uncertainty through assumptions of the future. Both roles of accountant and financial professional are incredibly important. The enterprise leader needs to understand both the enterprise’s performance historically, and the best options to get performance in the future. When accounting and financial work together, they can enable decisions that are in the best debt charge of the enterprise.
Neither Zach De Gregorio or Wolves and financial Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for enterprise advice.
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