Accounting and economics are two top choices for people considering a career in any financial discipline.
The two paths have a lot of similarities but are inherently very different.
It would help if you recognized the difference between these two disciplines, not only to decide on a career between the two disciplines but as a matter of simple general knowledge.
Accounting vs Economics
The main difference between accounting and economics is that accounting is a discipline that focuses on monitoring the financial records of a company, an organization, or an individual. On the other hand, economics pays special attention to economic trends, how they affect the distribution of goods & the spending of money (frequently referred to as supply & demand), and formulate economic theories.
Accountants ensure that all balance sheets, tax documents, and other such financial documents and procedures adhere to regulatory guidelines.
Economics tends to focus more on economic theories, financial trends, and other global issues that impact the production of goods and services, the distribution & acquisition of goods, and the money associated with them.
Comparison Table Between Accounting and Economics
|Parameters of Comparison||Accounting||Economics|
|Major Responsibility||Accounting deals with recording, summarising and reporting of financial business transactions.||Economics deals with the rules of supply & demand, analysing financial & economic trends and studying economic theories.|
|Fields of Study||Fields of study in accounting includes, but is not limited to hedge accounting, transaction recording rules, forensic accounting and financial accounting.||Macroeconomics and microeconomics are the two main fields of study in economics.|
|Utilization of Data||Accountants utilize data and information that is extracted from accounting principles and conventions. Such principles and conventions are to be followed by all accountants.||Economics makes use of research and assumptions to form conclusions, economic theories and to analyse trends.|
|Applications||Accounting in an organisation is used for budgeting, forecasting, investing & financing and other such decision-making.||Economics in an organization is used to identify and evaluate drivers of supply & demand for the products & services they offer.|
|Career Opportunities||Professionals in Accounting can work as accounts in an organisation, a government accountant, project accountant, an auditor, an investment analyst or a CPA.||Economists work as financial examiners, management analysts, economic researchers, budget analysts etc.|
What is Accounting?
Accounting is a discipline that deals with recording, summarising, and storing the financial transactions of a business, an organization or an individual.
Accountants’ books are a historical record of an individual’s or an organization’s financial transactions for a particular period of time.
GAAP (Generally Accepted Accounting Principles) accounting standards are vital for tax compliance and accurate financial reporting.
In the modern world, global accounting conventions must be followed to enable the exchange of information in our growingly globalizing world.
Accounting is one of the key functions of any business, or any organization, for that matter.
In smaller businesses, it is generally handled by a bookkeeper or an accountant. Larger firms tend to have entirely dedicated finance departments with dozens or more staff members. Some large firms also tend to outsource the process completely.
Accounting is also vital for investors. It is at the heart of modern financial markets.
Thanks to the discipline of accounting, investors can rely on timely and accurate financial information. There is also enough transparency needed to manage risks and plan projects.
Regulators rely on accountants to obtain auditors’ opinions on companies and annual 10k filings.
What is Economics?
Economics is a social science concerning producing, distributing, and consuming goods & services.
Essentially, it studies the law of supply & demand.
The principle of economics is that human beings will always have unlimited wants, but the world has only so many resources.
Due to this, the principles of efficiency and productivity are taken in utmost consideration.
It studies how organizations choose to allocate their resources. These organizations can be individuals, businesses, non-profit organizations, governments & nations.
The building block of economics is the study of labor & trade. The discipline must determine where the allocation of labor and resources is most productive.
Economics as a discipline dates back to the 8th century BC when a Greek farmer named Hesiod said that scarcity can be overcome by properly allocating material, labor, and time.
Economics is further broken down into macroeconomics and microeconomics.
Macroeconomics focuses on the behavior of the economy as a whole. Microeconomics tends to focus more on individuals and individual businesses.
Many economic systems have been debated and put into practice in countries.
These economic systems include primitivism, capitalism, socialism, communism, etc.
These economic systems have been highly debated for centuries. They are still debated heavily to this day. These debates have led to entire revolutions in countries that have resulted in a total upheaval of the governments of these nations.
Main Differences Between Accounting and Economics
- Accounting is responsible for recording, summarising, and reporting an organization’s business transactions. Conversely, economics focuses on analyzing economic trends, the rules of demand & supply, and formulating economic theories.
- Accounting is divided into various branches, such as financial accounting, forensic accounting, hedge accounting, etc.
Economics is bifurcated into macroeconomics and microeconomics.
- Accountants make use of standard accounting principles and conventions to record business transactions. Economics uses research data to analyze trends and fabricate new economic theories.
- Accounting is used for budgeting, decision-making for investing, forecasting, etc.
Economics is used to identify key factors of demand & supply for products and resources a business offers.
- Accounting professionals can work as accountants for an organization, government accountants, auditors, CPAs, investment analysts, etc.
Economists work as financial examiners, management analysts, economic researchers, etc.
Accounting and economics are essential branches of any organization to work efficiently. These professionals can be pivotal for any business, organization, or government.
Understanding the importance of these fields in depth can be hugely transformative for your business/organization or even for your own personal life.
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