The three Branches of Finance and their relationship with Accounting

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accounting The three Branches of Finance and their relationship with AccountingFinance or taloushallinto is a term that is used to describe two closely linked activities: the actual means of acquiring funds, and the study of how these funds are managed. Because finance is a wide field, it can further be subdivided into three categories which include personal finance, corporate finance, and public or government finance. All the three categories are concerned with making sound investment decisions, accessing low-cost credit, allocating funds for liabilities, and banking.

Each of the three categories of taloushallinto or finance, however, has its unique considerations. For instance, personal finance is almost entirely concerned with how individuals use, manage, and acquire money. This subcategory of finance is concerned with personal decisions and activities that include budgeting, insurance, saving for retirement, debt management, mortgage servicing and more. This subcategory also encompasses individual efforts to analyze current and future financial positions.

Corporate finance, on its part, is largely concerned with acquiring and managing funds to run a corporation. Corporate finance may also refer to a department or section within an organization charged with the role of overseeing financial activities of the organization. Besides managing and acquiring funds for a specific organization, corporate finance is also concerned with optimizing shareholder value by devising and implementing both short-term and long-term financial strategies. It is also worth adding that capital investment activities and banking also falls squarely in the category of corporate finance.

The third subcategory of taloushallinto or finance is called public finance. Public finance is simply described as the study of the role of the government in the economy. Put differently, public finance is the study of how the government raises and uses money, and the effect that these decisions (raising and using) have on the society. In more specific terms, public finance is concerned with how the government raises taxes and spends the funds collected from taxation.

That said, now let’s examine the relationship between finance and accounting. Although most lay persons believe that finance and accounting are one and the same thing, the truth is that the two fields are closely related but different. Finance and accounting are related in the sense that finance is concerned with activities like acquiring and managing money while accounting is concerned with

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