Finance is a broad term used in many fields of business to refer to a number of things about the management, development, and financial analysis of assets and liabilities. In accounting, it refers to the process of getting assets or liabilities measured, reporting information about them to a third party, coming up with an estimate of the total value of the assets or liabilities, and reporting the results of that measurement to a company or another person who uses the information for a purpose related to their own interests. There are many forms of accounting, but finance is probably the most popular. Other areas of business may also use the word “finance,” but usually only in reference to specific activities related to making money.
The study of how people make investments and use those investments to create wealth has become known as “finance,” as it is often intertwined with economics, but there is also a distinct field of business that does nothing whatsoever economically, and that is Real Estate. Real estate is simply the term used by the business world to describe any activity that produces a marketable asset and makes the owner of that asset rich. This can include properties used for businesses, homes bought for private residences, land for farms, buildings used for businesses, etc. The most common real estate forms are commercial real estate and residential real estate.
As you can imagine, all this large field of endeavor had to be organized in some fashion, and that organization comes in several recognizable forms. Not long after finance became a general term, banking began to take on a specific identity as it began to acquire more specific functions. Initially, banking simply meant providing loans to those who needed them, keeping track of those loans, and making interest payments to its customers. Over time, however, banking began to take on more specific roles as various banks set up specific investment practices. Today, most banks do not strictly follow any single financial system, instead maintaining a variety of financial systems, such as savings and loan, traditional CD’s, thrift, and a host of other special purpose lines.
Accounting is the process of collecting and interpreting financial data. Like finance, accounting uses a variety of different systems and varies according to the financial function it is covering. Most accounting firms maintain a website where clients can find out more about their company, and also where they can obtain a free financial report. Because accounting often involves a great deal of math, many accountants also provide consulting services and work as certified public accountants.
Some of the larger banks in the US also maintain extensive investment sections, particularly those that directly work with the stock and bond markets. These banks tend to have much larger investment departments than other types of banks, and they depend heavily on large amounts of capital to support their activities. Much of the financial analysis conducted by these banks is carried out by investment securities analysts.
In order to perform the various functions of finance, it is important to have an understanding of the different kinds of finance. You should be familiar with how different financial markets operate, how they are structured, what their goals are, and how they go about obtaining money from investors and lending it out to others. Some of the most common types of funds are savings and investment funds, commercial loans, estate investments, corporate bonds, derivatives, mutual funds, and more. While each of these has its own specific purposes, none of them can be viewed as being a part of the field of finance itself.