CHAPTER ONETHE ROLE AND FUNCTIONS OF ACCOUNTING AND FINANCE

Corporate finance is a middle ground between economics and accounting. Corporate finance is based on theoretical economic concepts applied to the “hard” numbers developed by accountants. Finance uses accounting information to analyze economic events. In a phrase, finance is applied economics. While accounting is the language of business, finance is its literature. Financial analysis provides a systematic approach to making business decisions.

Finance is not an end in and of itself. It is a tool used to monitor, evaluate, and communicate the results of business decisions. Finance is a tool used to assess past events as well as anticipate the consequences of future decisions. It is a tool ...

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