Accounting is concerned with the recording of transaction in a systematic manner. As such it is concerned with recording the business event in a monetary form whether the cash is involved or not at the time of recording the business transaction. - Example: Consider a situation where a firm has bought material for 50 000 on 01.01.2007. This amount is to be paid after 30 days from the date of purchse to the supplier on 31.01.2007 . In this though money is not spent on 01.01.2007 the transaction is recorded in the books of accounts.
Accounting functionalities involve 1. Recording of transactions (Online transactions Journal vouchers) 2. Checking the prime books (Cash book Journals and Bank book) 3.Generating financial statements (P&L and B/S).
Finance is concerned with raising of funds to meet the various cash flow needs of the organisation. Finance functions starts from gathering the cash flow information from the accounting records and also prepare projections of cash flow. Finance activities are concerned with preparing budgets and compare the same with the actual results for finding variances. Here the sources and application of funds are prepared for both the budgets and actual scenarios.
Finance functionalities involve 1. Bank co-ordination 2. Sourcing and Application of funds 3. Preparing Budgets and 4. MIS and EIS reporting. Finance activities will encompass through the Accounting and Operations aspects of an organisation.
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