Interplay of Accounting, Finance, and Economics in Financial Economic Thought

1437 Words3 Pages
bulb-icon

Recommended: Accounting and its impact in modern life

MFE 2015
SUNDAY BATCH

MFE 08- ACCOUNTING

MS. VAJIRA KUMARIHAMY

THE CONTRIBUTION OF ACCOUNTING, FINANCE AND ECONOMICS AND THEIR INTERRELATIONSHIP TO FINANCIAL ECONOMIC THOUGHT

Name : S Mallikarachchi

Student’s Registration Number :

Date : 2015/06/21

Table of Contents Page No.
1. Financial Economics 3
2. Interrelationship among Accounting, Finance and Economics 4
3. Contribution to Financial Economic Thought 5
4. Conclusion 7 1. Introduction

The inter-relationship among the three subjects – Economics, Finance and Accounting has a timeless validity.
In definition, Economics is a social science and describes the factors which determine the production, distribution …show more content…

Contribution to Financial Economic Thought

The three subject areas, Accounting, Finance and Economics are inter-related with each other as well as interrelated with Financial Economics in developing Financial Economic Thought.
If we look at the contribution of Accounting to Financial Economic Thought, the initial idea of an individual, a firm or an economy is obtained on the basis of Financial Accounting information provided. An in-depth understanding of the financial accounting information provided will guide the decisions towards an optimal resource allocation.
The contribution of Economics towards Financial Economics is somewhat obvious, i.e. concepts such as opportunity cost are used to place a value for the foregone return and validate the decision taken to employ the resources for the best option available.
The contribution of Finance to Financial Economic Thought can be depicted by way of how assets are valued based on a risk and return scale in order to maximize the wealth.
Financial Economic Thought is shaped by all these three areas. The unbreakable inter-relationship among the three areas of interest has many uses in Financial Economic Thought. Below are a few areas where the inter-relationship contributes towards the Financial Economic

Show More
Related

  • Four of the Major Economists' Theories

    2610 Words  | 6 Pages

    Although most economists cannot come to agreement on the definition of economics, the preceding quote from l. Robbins, in my opinion, seems to just about sum it up. Since the beginning, when man first had to choose between hunting and sleeping, there was economics. Today economics is in everything we buy, use, and make, from the gas in our cars to the food on our tables, economics plays a vital role with the manufacture, distrubution and consumption of each. To help us better understand the economic trends, certain men have become economist. In this paper I will revisit four of the major economists’ theories. Starting with the theories of Adam Smith, a philosopher well as an economist, to the modern (relatively) day theories of Milton Friedman, a Nobel Prize awardee, we will chronologically review the theories of Adam Smith, Karl Marx, John Maynard Keynes, and Milton Friedman.

    Read More

  • A Critical Component Of Any Accounting Theory Course

    1218 Words  | 3 Pages

    Accounting Theory: Conceptual Issues in a Political and Economic Environment (6th edition ed.). South Western College Pub.

    Read More

  • Accounting profit and True Profit

    996 Words  | 2 Pages

    Olusegun Wallace, R. 1996. The Development of Accounting Research in the UK. In: Cooke, T. and Nobes, C. eds. 1997. The Development of Accounting in an International Context. London: Routledge, pp. 218-254.

    Read More

  • Budget Analysis

    1842 Words  | 4 Pages

    Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.

    Read More

  • The Role of Economics in Sports

    5002 Words  | 11 Pages

    Economics is the study of how best to allocate scarce resources throughout an entire market. Economics affect our lives on a daily basis, whether it is on a business level or a personal level.

    Read More

  • Economics: Demand and Quantity Demanded

    1410 Words  | 3 Pages

    It is the study of resource allocation, distribution and consumption, of capital and investment, and of the management of the factors of production. (http://wikitionary.org/wiki/economics)

    Read More

  • Why Study Economics Essay

    1241 Words  | 3 Pages

    There are two reasons help us to answer this question. Firstly, as it mentioned above, economics could provide supports to help people make right decisions. Everyone have to make a considerable amount of decisions in life and work, no matter they are politicians or housewives. For example, a wise politician makes use of economics theory to make economic decisions in order to run the country well and bringing prosperities to people. A smart housewife knows that breads’ and vegetables’ prices are economical in the afternoon under economics’ guidance. Some common rules hide incredible economics theories people might never notice because it seems so simple in the normal life. If we known these theories, we can take advantages of it to make right decisions at vital moment. Secondly, economics, as one of the most important subjects in academic circle, playing a significant role and affecting many aspects of our life. Before I study economics, I found many strange things whereas I can not explain by using common sense. For example, why are diamonds so much more expensive than water even thought water has vital importance to human existence than diamonds? Why does government levy taxes on merchandises to increase citizens’ financial burden? Why does the fast food restaurant drink can be refilled for free? After I learned the marginal cost and

    Read More

  • Finance Personal Statement

    548 Words  | 2 Pages

    Finance is a field that had always fascinated me right from my undergraduate college days. What make me interested in this particular field of study are the art of finance and the complexity of investment market which would allow me to employ my personal skills, such as analytical and communication skills, along with my personal characteristics such as dedication and compassion for what I do. As one of the most important sector in the world, I believe it would provide me with a broad range of career options.

    Read More

  • Behavioural Finance Case Study

    1800 Words  | 4 Pages

    Our understanding and the concept of investment in behavioural finance combines economics and psychology to analyse how and why investors make final decision. As an investor one’s decision to invest is fully influence by different type of attitudes of behavioural and psychological ( Ricciardi & Simon, 2000). Yet, in order to maximize their financial goal, investors must have a good investment planning. Furthermore , to gain a good investment planning , there must be a good decision making among investors. They have to choose the right investment plan I order to manage the resources for different type of investments not only to gain profit wise but also to avoid the risk that occur from investment.

    Read More

  • I Want to Pursue a Career in Economics

    516 Words  | 2 Pages

    In today's world, economics associated disciplines are of fundamental significance and application and this has encouraged me to pursue a degree in Economics. Economics has an important relevance in all of our lives. As consumers we try to make the best of our limited incomes. As workers we take our place in the job market. As citizens of a country our lives are affected by the decisions of our government: decisions over taxes, decisions over spending on health and education, decisions on interest rates, decisions that affect unemployment, inflation and growth. As dwellers on the planet Earth we are affected by the economic decisions of each other: the air we breathe, the water we drink and the environment we leave for future generations are all affected by the economic decisions taken by the human race. It is these stimulating issues that excite me about economics. I enjoy studying Economics enormously and believe my passionate interest in economics is continually strengthened by my regular reading of 'The Economist'

    Read More

  • Importance Of Accounting History

    754 Words  | 2 Pages

    Accounting has been a living part of history since the Neolithic period and remains a prevalent and ever-evolving profession still to this day. This essay therefore proposes to look at the significance and role of history specifically related to the accountancy field. In order to substantiate this claim of the importance of accounting history, numerous benefits of accounting history will be presented. Factors such as the use of historical research and its availability thereof to constantly develop accounting policies will be discussed as well as how historical accounting practices can be used to understand current practice and assist in the training of individuals in the accounting field. Lastly, the importance of history in the development

    Read More

  • Reflection Paper In Finance

    2185 Words  | 5 Pages

    I am currently majoring in Finance Management. Most of the time people think of finance as just managing money. However, finance is needed for so much more! The finance industry deals with starting businesses, developing new products, expanding markets, as well as everyday things like saving for retirement, purchasing a home, and even insurance. The stock market, asset allocation, portfolio analysis, and electronic commerce are all key aspects in finance. In this paper, I will explain how these features play a vital role in the industry, along with the issues that come with these factors.

    Read More

  • The Importance Of Accounting In Our Modern Society

    2459 Words  | 5 Pages

    Accounting is so important in our modern society. It serves a variety range of place in our society. It serves a variety range of place in our soceity, from school to hospital, from business firm to government agencies. It's also the main force in regulation of taxation and industrial activity. It serves a great aspects on the development of mass-production systems, any way, it's a very important term in our modern soceity.

    Read More

  • Financial Theories And Strategies

    1533 Words  | 4 Pages

    Financial theories are the building blocks of today's corporate world. "The basic building blocks of finance theory lay the foundation for many modern tools used in areas such asset pricing and investment. Many of these theoretical concepts such as general equilibrium analysis, information economics and theory of contracts are firmly rooted in classical Microeconomics" (Oaktree, 2005)

    Read More

  • Financial Management Essay

    714 Words  | 2 Pages

    “Financial management is just managing the limited financial resources of the organization has." This includes the use of cash and other assets such as equipment. Financial management has a different meaning than “financial management is the study of obtaining funds and their effective and judicious use, in terms of the overall objectives of the company." The important role of financial management has increased significantly in recent times. Factors such as economic unpredictable turns, fluctuations in interest rates, inflation and disinflation require processing financial management skills of first level. There is a demand for financial management in many sectors of society, including the construction industries. Study of financial management has developed over time in response to changing needs of business management. In general, the field of finance is attached to the economics and accounting. Finance was recognized as an independent field of study in 1900. Due to the Great Depression of the 1900s, the emphasis shifted from the capital fund for the perseverance of capital and maintenance of liquidity. Government intervention in the financial side of the business was strengthened in this period. The most important steps of contemporary financial management began in the mid- 1950s. The nature of financial management was interested in studying the fixed assets management of capital budgets , the efficient use of existing assets , capital structure the composition and the dividend policy . The risk-return relationship has also been emphasized by the last 30 years. Overall objective is to maximize long- term shareholder of the company’s wealth, increasing the market value (price) of shares

    Read More

More about Interplay of Accounting, Finance, and Economics in Financial Economic Thought

Open Document