Difference Between Accounting and Accountancy

A business has several aspects, but one of the most important is financial aspects. For keeping the financial side clear, many tools get used. Accounting and accountancy are two of them.

Recording every transaction is very important. This will keep the business free from any scam.

Accounting vs Accountancy

The main difference between accounting and accountancy is that accounting is related to the record of financial transactions, while on the other hand, measuring financial statements is related to accountancy. Accounting does not have a large scope to offer. But accountancy does have the capability to offer a wide scope.

Accounting and Accountancy

Accounting is for managing and running the business of a company. If you want to avoid any scams and loopholes in your financial aspect, then you can not avoid accounting. According to the type of business, the form of accounting gets used.

Accountancy handles both financial and non-financial statements of a business. It is theoretical and practical at the same time. To decide the company’s overall growth, the owner needs to get the accountancy done. This will also get clients for investment.

Comparison Table Between Accounting and Accountancy

Parameters of ComparisonAccountingAccountancy
DefinitionThe process of recording financial transactions is called accounting.The process of measuring, processing and recording financial statements is called accountancy.
ConcernIt is only about the practical aspects of a business.It is concerned about both theoretical and practical issues of a business.
Scope It can not offer a wide scope.It can offer a wide scope.
ToolsAccounting uses financial statements as a tool.   In accountancy techniques and principles gets used.
DependencyIt depends on bookkeeping.It depends on accounting and bookkeeping.
ObjectiveThrough accounting, the financial income, as well as the net income of the business, can be known.Through this, a business can develop decisions and techniques needed for the expansion of the business.

What is Accounting?

Accounting is categorised as a process that is related to the record of economic transactions. This is related to business. The whole process of business includes several steps. One has to summarise, report, analyze and do many other calculative things. 

We can split up the accounting based on the sector. Four divisions can be done, these are – government accounting, corporate accounting, public accounting and forensic accounting. They do not have many similarities between them. 

In government accounting, dealing with state and federal governments are needed. In the case of corporate accounting, the company deals with financial data. Public accounting looks over the records of clients.

In forensic accounting, collecting and recovering financial data takes place.

Accounting is needed to keep business going. To keep track of income and expenditures, a company needs to utilise this. It has a set of rules that must get followed.

If the accounting is crystal clear, then it is easy to attract clients for investing. The management of the business is observed here.

What is Accountancy?

Although not the same, accounting and accountancy are not aloof. The accountancy takes care of the financial as well as the non-financial statements of a company of business. It measures, processes, and finally records the statements. 

During the process of accountancy, one needs information about managers, stakeholders, investors.

Annually the total money spent and the total earned money can be calculated with the use of accountancy. Assets, liabilities, and equities are the basic things about it. The equities of the owners are a vital part of this process. 

Investment done by the clients is equity. Assets are possessions of the business. While liabilities are the debt. This debt must get paid by the company. 

This process will provide answers for ‘why to do’ and ‘how to do.’ Accounting will help to set the techniques that will get undertaken for the betterment. Accounting comes under this.

Therefore, it has wider coverage. The reason and method of managing the firm books get decided by accountancy.

Main Differences Between Accounting and Accountancy

  1. When you record the financial transactions of some business, it is called accounting. On the other hand, sometimes, you need to measure and process financial statements. After that, the record of it is called accountancy.
  2. Accounting only deals with the practical aspects of a business, while accountancy will take care of both theoretical and practical things related to a business.
  3. The scope of Accounting is not wide. It is narrow, but accountancy is capable of offering a wide scope.
  4. An accountant’s career is accountancy, and accounting is the nature of work done by him/her. 
  5. A set of financial statements is a useful tool for accounting. But for accountancy, techniques and principles are the tools to use.
  6. Bookkeeping is a central fact for accounting. It is needed to keep the records clear. On the other hand, accountancy will require both bookkeeping and accounting.
  7. To know the financial income along with net income, a business needs to use accounting. While making decisions and coming up with fruitful techniques, a company needs to take help from accountancy.
  8. To perform accounting, one needs to possess knowledge in accountancy. Accountancy is an area of study that leads to accounting.

Conclusion

Many people think that accounting and accountancy are the same things. They sound a lot similar, and as they belong to the same field, people get confused and take them as the same thing.

However, in reality, they are different. They have some similarities, but essentially they are different with separate purposes. 

Chartered Accountants or CAs and CS do this job. It is crucial to look after the books, records, and transactions. Banks of government are responsible for keeping the scams away from the country.

By recording the books, not only businesses and firms but customers will be safe too.

To get rid of the confusion, people need to know the definitions and objectives to mark the difference between the two. If you are planning to conduct a business, then wiping away the confusion between the two is essential. 

References

  1. https://www.taylorfrancis.com/books/mono/10.4324/9781315883328/history-financial-accounting-rle-accounting-edwards
  2. https://www.sciencedirect.com/science/article/pii/S104523541300052X
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