What is the difference between finance, banking, commerce, economics, auditing, accounting?

ll of these field having individual identity. Although they suppport other fields, but having their own importance.
For better understanding or differentiation, one would try to understand the definitions of these fields.

FINANCE ::
It is a process of wealth management.. in simple words... before starting any business, one would plan where and how to invest money for better return, for which there are some tools available to analyse the project before going head like NET PRESENT VALUE (NPV), RATIO ANALYSIS, PRESENT AND FUTURE VALUE ANALYSIS, PAY BACK PERIOD, etc.


ACCOUNTING ::
Accounting is an art of recording business transactions. Word "ART" has been used because of in accounting there should be balance in both sides of entry, which accumulately make some sense in finalizing the position. ACCOUNTING comes after transaction has been done or expected to done in future, As we understand ther term finance, accounting needs to follow the business transactions in writing, which is helpful in analysing the financial decision made just before start of business, and helpful in amending (if any) financial decision for next year.


AUDITING ::
Investopedia expalins .....
An unbiased examination and evaluation of the financial statements of an organization. It can be done internally (by employees of the organization) or externally (by an outside firm).


BANKING ::

engaging in the business of keeping money for savings and checking accounts or for exchange or for issuing loans and credit etc.
Bank play an important role of intermediary mostly of cash handling between business to business B2B, business to client B2C, or any other sources. It also deposit and to lend on interest.


Economics ::
Adam Smith’s definition of Economics.Economics is the social science that studies the production, distribution and consumption of goods and services. The term economics comes from the Greek for “oikos” means house and “nomos” means custom or law, hence the term economics means “rules or laws o household”.

A definition that captures much of modern economics is that of Lionel Robbins in 1932 essay which states as “the science which studies human behaviour as a relationship between ends and scare means which have alternative uses.”



COMMERCE ::
Commerce is a branch of business . It is concerned with the exchange of goods and services. It includes all those activities, which directly or indirectly facilitate that exchange.
There is also perceived that term COMMERCE & BUSINESS are having same meaning, the difference is only of BRITISH & US english.

FINANCE: This deals with financing (Lending Funds/money) a project of Individuals or an organization with certain conditions on interest rate, period of repayment, margin money stipulations to be brought in by the Enterpreneur etc.

BANKING: This includes all the present day banks where they accept the deposits from public at a certain interest rate and lend those funds at a certain interst rate-- subject to certain guidelines stipulated by the Central Bank or RBI in India. Normally the interest rate on Loans will be more than the interest rate on deposits that being the Banks' margin / profit within which they have to cover all their operating expenses in addition to making provision for bad debts as per RBI norms from time to time. In view of the risks involved in getting back the lent money with interest, the NBFCs or the Non Banking Financial Companies are forbidden from taking deposits from the public; they may lend their owned funds.

COMMERCE: Commerce is nothing but trading or business that ncludes overseas business i.e. Exports and Imports. You sell your products - raw materials or Finished Products or Services - loading your margin to the cost of production. In India as of now E-Commerce (Online portals/ dot coms) is booming compared to the conventional brick and mortar model (i.e. setting up a shop physically) posing a threat to the retail outlets.

ECONOMICS : This is a subject in the category of ARTS. Economics prima facie deals with Land, Labour, Capital and Organization and their respective returns viz., Rent, Wages, Interest and Profit/Loss. It also deals with the Economy of the Country like the GDP, Prices, Inflation, Exports, Imports etc. Dynamics of low interst rate regime (lower the cost of funds, more the industrial development) and how they augment the industrial development of a country etc., are dealt here.

AUDITING: This is loosely like Inspection of what has been done in an Organisation with regard to how the accounts have been drawn, following the laid down norms scrupulously, compliance or otherwise etc. Depending upon the nature of activity or business, an Auditor (Chartered Accoutant) has to verify the level of compliance of norms, guidelines set by various Quasi, Non-quasi bodies of Government with regard to Accounts maintenance, Taxes and Interest payments, Compliance of Labour laws etc. Now a days Auditing is taking place in every segment including Software Industry/ ITeS where the people with CISA qualification are much in demand. It is famously said - Auditors are watch dogs but not blood hounds making it clear that they can only point out mistakes, but cannot punish.

ACCOUNTING: Good olden days there used to be signle entry system where if some income or expenditure item is omitted to be entered, it used to be difficult to trace the difference. Every Debit entry will have a Credit Entry and vice versa. With the current double entry system it becomes easy to trace such mistakes. Of the accounting system Tally is the most popular software across the country. This includes drawing of Trading Account ( for Manufacturing Units) P&L Accounts and finally Balance Sheets with knowledge of Corporate and Tax Laws of Limited Companies and Secretarial practices.

Bank vs Financial Institution
 

Financial institutions can be divided into two types: banking financial institutions and non-banking financial institutions. Banking financial institutions include commercial banks whose primary role is to accept deposits and make loans. Non-banking financial institutions include investment banks,insurance companies, finance firms, leasing companies, etc. The following article takes a closer look at both types of financial institutions and explains the similarities and differences between banks and financial institutions.

What is a Bank?

Bank falls under one category of financial institutions known as banking financial institutions. A bank is known as financial intermediaries that act as middlemen between depositors or suppliers of funds and lenders who are the users of funds. The main tasks of a banking financial institution are to accept deposits and then to use those funds to offer loans to its customers, who will in turn utilize them to fund purchases, education, to expand business, to invest in development, etc. A bank also acts as a payment agent by offering a host of payment services including debit cards, credit cards, cheque facility, direct deposit facilities, bank drafts, etc. The primary purposes in depositing funds in banks are convenience, interest income, and safety. A bank’s ability to lend out funds is determined by the amount of excess reserves and the ratio of cash reserves held by the bank. It is relatively easy for a bank to raise funds as certain accounts such as demand deposits pay no interest to the account holder (this means that no cost is incurred by the bank in attracting deposits for demand deposit accounts). A bank makes money investing the money that they receive from deposits, sometimes in assets and financial securities, but mostly in loans.

What is a Financial Institution?

There are also a number of non-banking financial institutions, which include investment banks, leasing companies, insurance companies, investment funds, finance firms, etc. A non-banking financial institution offers a range of financial services. Investment banks offer services to corporations which include underwriting of debt and share issues, securities trading, investment, corporate advisory services, derivate transactions, Financial institutions such as insurance companies offer protection against specific losses for which an insurance premium is paid. Pension and mutual funds act as savings institutions in which investors are able to invest their funds in collective investment vehicles, and receive interest income in return. Market makers or financial institutions that act as brokers and dealers facilitate the transactions in financial assets such as derivative, currencies, equity, etc. Other financial service providers such as leasing companies facilitate the purchase of equipment, real estate financing companies make capital available for real estate purchases and financial advisors and consultants offer advice for a fee.

What is the difference between Bank and  Financial Institution?

There are a number of large differences between banking financial institutions and non-banking financial institutions in an economy. The main difference is that a banking financial institution can accept deposit into various savings and demand deposit accounts, which cannot be done by a non-banking financial institution. A non-banking financial institution provides a variety of services including some that overlap with banking financial institutions such as grant loans, offer financial advice, investment in financial securities, leasing of equipment, etc. In addition, non-banking financial institutions also offer additional services such as insurance coverage, underwriting activities, market making, etc. The primary purposes in depositing funds in banks are convenience, interest income, and safety. Whereas the primary purpose in investing funds in non-banking financial institutions is to gain additional income.

Summary:

Bank vs  Financial Institution

• Financial institutions can be divided into two types: banking financial institutions and non-banking financial institutions.
• A bank is known as financial intermediaries that act as middlemen between depositors or suppliers of funds and lenders who are the users of funds.
• The main tasks of a banking financial institution are to accept deposits and then to use those funds to offer loans to its customers.
• There are also a number of non-banking financial institutions which include investment banks, leasing companies, insurance companies, investment funds, finance firms, etc. A non-banking financial institution offers a range of financial services.
• The main difference between the two types of financial institutions is that banking financial institutions can accept deposit into various savings and demand deposit accounts, which cannot be done by a non-banking financial institution.
• The primary purposes in depositing funds in banks are convenience, interest income, and safety. Whereas the primary purpose in investing funds in non-banking financial institutions is to gain additional income

Bank vs Banking

Bank is an organization or a company like any other company, which sells and buys goods and services in the market. The main difference between other companies and banks is that, other companies are trading goods and services for money, but in the case of bank the trading item itself is MONEY, instead of tangible goods or intangible services. How a bank works can simply be explained as accepting deposits from customers by paying interest to their deposits, while lending this money deposited to required parties for an interest rate, which is higher than that paid to depositors. The net gain is the main source of income to banks (especially for commercial banks, because the central bank and investments banks have other ways of earning revenue). This is a classical view of a bank; however nowadays, banks are engaged in other activities as well. All the activities carried out by a bank is called banking.

Bank

The oxford dictionary defines bank as “an organization offering financial services, especially loans and safe keeping of customers money”. There must be a central bank in every country, which is authorized with monitory policy making by the government of that nation. It acts as a financial intermediary. Other than the central bank, there are several types of banks like retail banks, investment banks etc. The commercial banks mostly deal with accepting deposits and providing loan facilities. Community development banks, community banks, and postal saving banks are some examples for retail banks. Merchant banks and industrial banks are good examples for investment banks.

Banking

Banking is the business activity of a bank. Simply, any activity carried out by a bank for business purposes is called banking. Accepting savings, Lending money, leasing properties to needy people, paying for cheques, providing mortgage facilities, acting on to standing orders, statement of instructions, providing safety locker facilities for valuable things, providing over draft facilities to current account holders, acting as institutional investors in financial market, issuing ‘letter of credit’ in the business of import and export, act as money changer, issuing travelers’ cheques are some of the activities carried out by modern banks in the banking industry. Nowadays, banking can be done via the internet, which is called on line banking.