You may have come across two different concepts, such as accountancy and accounting. Is it the same term? Or these two concepts have different definitions. Check out the article to find out.
Understanding Accountancy
Accountancy is a process of managing all gains, losses, expenses, etc., of an entity. It’s a way of measuring, analyzing, summarizing, and sharing the financial information a company gains from bookkeeping.
Thanks to accountancy, it became possible to deliver relevant financial information to people in charge of a business, including public association — management, shareholders, investors, owners, etc. The management can make sound financial decisions according to the information gathered through accountancy.
But doesn’t the definition of accountancy sound familiar? Yes, it does sound like accounting. So, what is the difference between these two concepts? Keep reading the article to learn more about accounting to learn why these two concepts are not identical.
What is Accounting?
Accounting is a process of preparing financial statements based on the gathered information. It depends on bookkeeping as it’s the main source of data.
A bookkeeper is responsible for keeping and recording all financial statements according to protocols used by the company. The accountant then analyzes and interprets the given datum.
It has several objectives:
- to maintain a proper record of all financial statements of a business;
- to calculate profit, loss, expenses during a specific year;
- to display the financial health of the business at the end of a specific year;
- to make sound decisions based on the financial health of a company;
- to keep control over the company;
- help prepare for auditor’s visit;
- to provide financial information to such parties as shareholders, investors, management, etc.
- to prepare for the tax year.
Accounting is based on a discipline that sets rules, terms, protocols, principles, and standards. So, accounting is a practical part of accountancy. The latter, in this case, is the discipline.
What is the Difference Between Accounting and Accountancy?
And now let’s find out about the differences between these two concepts. Accountancy is a set of rules, protocols, principles, techniques that create a program or system for accounting. Accountants do the job according to accountancy principles and rules.
Students at a university learn how to become professional accountants by obtaining a master’s degree in accountancy. Accountancy is concerned with such concepts as:
- how and why to do specific facets of accounting;
- providing a foundation to the accounting system;
- covering principles and rules for both accounting and bookkeeping.
Accountancy explains why and when an accountant should use certain techniques.
If you want to understand the differences between these two concepts better, check the following list:
- You use accounting to maintain and record financial statements by following specific standards. But accountancy covers the systematic body of knowledge that determines what mechanisms and techniques to use when accounting.
- Accounting is a discipline covering the work of accountants. But accountancy is a career path or profession chosen by a future accountant.
- Accounting is the practical part; accountancy is a theoretical part that helps to use accounting principles.
- Accountancy provides knowledge to accountants. But accounting is the job that requires using this knowledge or resources.
- Accountancy has a wider scope since it covers bookkeeping and accounting.
- Accountancy tools are standards, principles, rules, concepts, conventions, etc. But the primary tools of accounting are trading, profit and loss account, balance sheet, financial statements, cash flow statements, etc. Accounting tools are developed by the accountancy discipline.
In simple words, the critical difference between both concepts is that accountancy is the theoretical part, while accounting is the practical part.
Final Thoughts
You can say that these two concepts are two sides of the same coin. Accounting is what you do when working as an accountant. Accountancy is what you study to become an accountant.
