The difference between accounting and finance is a matter of perspective. Finance is looking ahead and accounting tells us where we have been. But then there is managerial accounting, which looks forward, and I never could tell it apart from finance. Since I never could steer a car by watching the rearview mirror, when I was in business school I took all the finance and managerial accounting that they had and only the financial accounting that was required.
Another place that direction comes up is in time value of money. The difference between compound interest (future value) and present value is which way you are going – and that is determined by which one you know when you start. They have an inverse relationship. (Sounds a lot like algebra, doesn't it?) With interest rate as a third variable (when you get comfortable with the process), you can use any two to solve for the third.
You can review the concepts in the study Cramlets™ and practice endlessly going backwards and forwards using the bottomless worksheets.
y^x,
Professor Cram
Friday, November 04, 2005
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment