Accounting and economics both involve plenty of number-crunching. But accounting is a profession devoted to recording, analyzing, and reporting income and expenses, while economics is a branch of the social sciences that is concerned with the production, consumption, and transfer of resources.
- Accountants track the flow of money for businesses and individuals.
- Economists track the larger trends that drive money and the resources that money represents.
- Both help businesses and governments plan for the future, make sound financial decisions, and set fiscal policies.
Most individuals deal with accountants only at tax time. But in the larger business world, accountants are a critical part of any organization. Their job is to track the flow of money into and out of an organization.
They use various methods to record and analyze budgets, expenses, and revenue and produce financial records based on the data they have analyzed. Their work is crucial for predicting the financial impact of any recommended change or potential future event on a business.
Accountants’ books are by nature a historical record of an individual or organization’s financial life for a specific period of time. The accounting standards, known as GAAP, are critical for tax compliance and for accurate financial reporting to shareholders.
In modern times, accounting operates according to principles of relevance, timeliness, reliability, comparability, and consistency of information or reports. Globally accepted accounting standards are followed in order to enable the exchange of information.