The terms accounting and accountancy are often used interchangeably. However, there are some important differences present between them. Generally, accountancy deals with the principles that guide the creation as well as employment of financial records. Accounting involves the procedure of maintaining these records. It is a business language.
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Accounting vs Accountancy
The difference between accounting and accountancy is that accounting is the process of making financial records plus reports for a business. On the other hand, accountancy focuses on principles for gathering as well as utilizing financial data. It involves analyzing financial activity by using accounting data.
Accounting aims to keep a full record of business transactions. It sequentially does this. This develops a base to prepare financial statements of the business. It tries to provide information to the concerned parties so that sound financial decisions can be effectively made.
Accountancy can be said to give accounting a framework as well as practices that accountants may employ to identify, collect, record as well as report financial details. Some other connected professions, like bookkeeping even come under accountancy. It includes the analyses of financial activity by using accounting data.
Comparison Table Between Accounting and Accountancy
|Parameters of Comparison||Accounting||Accountancy|
|Definition||It is a systematic procedure that includes measurement, recording, classification, summarizing, presenting as well as interpreting financial details of a company||It includes the systematic body of knowledge that prescribes accounting principles, conventions plus techniques that should be followed in the accounting process|
|Looks at||Nature of work carried out by the accountants|
|Deals with||Practical area||Theoretical and also practical area|
|Main tools||Financial Statements||Principles as well as techniques|
What is Accounting?
Accounting involves the preparation of financial statements and also their presentation. It aims to do this simply, based on the details recorded, employing the bookkeeping procedure by the bookkeeper.
When bookkeeping is going on, business transactions and even events get identified and recorded systematically. This is the summarizing stage that handles the analysis along with the interpretation of bookkeeping records.
When comes to accounting, can be said to be a discipline that is based on different terms, rules, principles, plus standards that have to be followed. It gives quantitative information about the economic activities of the company that plays a major role in making decisions.
Simply, it can be said to be the means through which financial performance as well as the position of a business entity get communicated to the financial statement users.
Accounting, therefore, aims to keep a proper record of business transactions. It calculates the profit and also loss that a business has during the financial year. With it, one can showcase the financial position of the particular business when the financial year ends.
It aims to keep proper control over the business and give financial information to the concerned parties.
What is Accountancy?
Accountancy includes the set of concepts, principles, techniques, as well as rules that can be said to constitute the framework of accounting. It entails full knowledge of accounting that includes a conceptual understanding of the subject along with practical application concerned with the maintenance of books of account.
It handles the “why to do” plus “how to do” areas of accounting and gives background to some accounting systems. The term has wider coverage. It covers bookkeeping and accounting.
Accountancy will tell for what reason and even in what way, a firm’s books of accounts get prepared, and even how accounting information gets summarized moreover communicated to its users.
Accountancy lays out the particular principles needed for the collection and employment of financial information. Accountants learn these principles and then put them into practice when looking at real-world situations to record financial transactions and make reports.
Accountancy principles are important for accountants, but it is not possible to get a degree in accountancy.
In practice, the principles of accountancy may be identical to basic accounting concepts that students learn when they are pursuing their undergraduate and also graduate studies.
Main Differences Between Accounting and Accountancy
- Accounting is a procedure used to keep a record of financial transactions whilst complying with the standards, principles, as well as concepts. Accountancy tends to be the systematic body of knowledge that will specify different accounting principles, standards, and even conventions that get used to record the accounting details of an enterprise.
- Accounting claims to be a discipline that handles the nature of work carried out by accountants. Accountancy is used to refer to the profession of accountants.
- Accounting is concerned with the practical part while accountancy is concerned with the conceptual and practical parts. This is why what we practice will be accounting and what we study and apply will be accountancy.
- Accountancy has a wider scope in comparison to accounting as accountancy involves bookkeeping and accounting.
- The main tool of accounting includes financial statements and the tools of accountancy are the accounting principles, standards, rules, conventions, as well as concepts.
From the above, one can see that accounting is a discipline, similar to other disciplines whilst accountancy is a profession that includes financial reporting as well as analysis of business activities.
Despite having their differences, accounting students will be familiar with the principles present in accountancy when they are pursuing a degree in the subject.
Therefore accountancy involves any decision-making procedure that may follow the preparation of some income statement, but accounting handles the preparation of this income statement by itself. The main difference between both terms is one of scope, generally.
Both terms include recording financial transactions, keeping accurate records, analyzing financial information, and then interpreting the results.
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