It is very important to understand the relationship between the finance and accounting in case you want to know about the best business accounting software. The two disciplines are inextricably linked with each other.

Accounting is an important input in a financial decision. Accounting as an activity involves the capturing and processing of monetary transactions and generation of periodical financial statements and other reports. These financial statements include the balance sheet, income and expenditure statement and the manufacturing a/c in some cases. These reports provide managers with information, which they use to make financial decisions.

Accounting is a sub function of finance. Finance as an activity is aimed at   meeting business objectives, making profits and meeting financial obligations. In case of any financial decision, accounting provides the necessary inputs.

Now that we have looked at the similarities between the two, let us note the differences. Accounting is different from finance in that it treats incomes and expenses differently than finance does. In accounting, income and expense are based on the accrual method. In other words in accounting an income is recorded when it is accrued, or when it becomes due. This is at the time goods or services are sold and invoiced or billed. Similarly, expenses are recorded by accounting when the company actually incurs the expense. Finance on the other hand considers income when it actually has been received and expenses when they have been paid.

In other words based on accounting data, which works on accrual, it will not be possible to judge or evaluate the financial position of a company.

The best business accounting software should be able to record data on monetary transactions on an accrual basis. It should be able to process, interpret that data for financial decision-making. For example, when a product is sold to a customer on 30 days credit a bill is raised. The amount of the bill becomes due after 30 days. In other words, it becomes an account receivable item. Accounting software should treat that bill as an accounts receivable after 30 days from the date of the bill. In other words, the amount should accrue after a period of 30 days.