Finance and Accounting Degrees - An Overview

Posted by Thurston Camp on February 16th, 2021

Finance is a broad term referring to things about the management, development, and the analysis of money and other financial assets. In particular, it includes the issues of why and how an individual, firm or nation obtains the funds necessary to conduct commerce, including government deficits and other financial liabilities; how those assets are used, including through investment, trade, saving or allocation; and how those assets are consumed, including by governments and households. The discipline of finance also covers the practical aspects related to making economic decisions based on economic principles and the theory of public finance. Finance theory is the language of the exchange process, the study of the role of money in economic activity, and the methods by which monetary instruments are related so as to meet the desired objectives of the public in relation to economic activity.

As a part of the broad field of economics, finance is an essential component that has important effects on all parts of the economy. The scope of finance is much broader than the traditional economics of personal and business finance. In fact, the scope of finance is simply too vast to be discussed adequately in any simple economics class. There are many different types of finance, including government finance, private finance, venture capital, banking finance, asset management finance, environmental finance, financial economics, corporate finance, risk management finance, and real estate finance. All of these have varying effects on the functioning of the economy.

The study of finance is extremely important to a manager of a company because finance is that part of the business that deals primarily with short-term cash management. Therefore, a manager of a company must know not only how to handle his own personal finances but also how to properly manage the resources of his organization. Without proper budgeting, businesses can suffer serious financial setbacks, especially in a down economy when cash flow problems can quickly lead to financial losses. In addition, a firm's long-term success depends greatly on its ability to plan efficiently for future expenses and its capacity to raise the funds it needs to fund those expenditures. Finance is key to the successful management of a company's budget and therefore, students should understand this critical aspect of budgeting before choosing a major in budgeting and finance at an accredited university.