In practice for a layman, the terms “accountancy” and “accounting” are pretty much used interchangeably, however, there is a thin line of difference between them. Many people often get confused between the two terms as they are very much inter-related. But fundamentally they are different.
In this blog, let’s find out how these two terms differ.
Key points of difference:
1. What they mean?
The term “accountancy” is generally used for the profession of accountants, i.e., those who execute the work of accounting and are very knowledgeable persons. Accountancy is an umbrella term that entails the duties or profession of accountants. The duties of an accountant involve the assessment, collection, and disclosure of financial information, the maintenance of accurate financial reports, the preparation of tax documents, and the monitoring of the economic resources of an entity.
Accounting, on the other hand, is concerned with regular tracking and documenting of all business transactions and then organizing them in the form of separate accounts and financial statements. It is a distinct field like that of economics, physics, biology, astronomy, etc. In other words, the term “accounting” aims to clarify the essence of the work of accountants (professionals) and the word “accountancy” applies to the discipline embraced by these individuals.
2. Which one is wider?
There is an accounting system in nearly every business enterprise. Accounting is a way of gathering, recording, summarizing, analyzing, and publishing the details about business transactions in monetary terms. But accounting is a part and parcel of accountancy. It is narrower in scope. To quote in simple words, accountancy refers to the entire framework of the theory, methods, and process of accounting.
We can say that accountancy is the parent term for the entire field or discipline and accounting is a particular duty of an accountant. In common, the principles of accountancy are applied to business enterprises through a range of three disciplines namely, accounting, book-keeping, and auditing.
3. What are they dependent upon?
Accounting begins where book-keeping ends. The results of book-keeping act as a basis for accounting.
Accountancy is based upon both book-keeping and accounting. Book-keeping and accounting are a sub-set of accountancy.
4. What is their role?
Accounting is concerned with summarizing the classified transactions of a business, and it then analyses and interprets the summarized results to communicate financial information to interested parties to enable them to make decisions.
Thus, the main function of accounting is to determine and disclose the net results and financial status of a business entity to all the interested parties.
On the other hand, accountancy can be described as the structured knowledge of accounting that is related to the principles and techniques sought to be applied in an accounting system. Accountancy teaches us how to prepare accounts, summarize the financial information, and convey results to interested parties. Its role is to prescribe certain rules, standards, and procedures that need to be observed while recording, classifying, summarizing, and interpreting financial information.
In addition, accountants, auditors, and book-keepers working for publicly-traded companies need to strictly follow a set of accounting standards and generally accepted accounting principles (GAAP).
With a few minor caveats, seeking a career in accounting or accountancy is essentially the same thing. But accountancy covers a wide variety of disciplines including auditing, book-keeping, taxation, forensic, cost accounting, and financial accounting. For instance, in a technical sense, an auditor may not be considered an accountant, but their activities essentially come under the umbrella of accountancy.
Comparison chart: Difference between accounting and accountancy
|Basis of difference||Accounting||Accountancy|
|What they deal with?||Recording, classifying, and summarizing financial transactions||Structured knowledge of accounting that is related to the principles and techniques sought to be applied in an accounting system|
|Dependency||On book-keeping||On book-keeping as well as accounting|
|Tools||Its main tools are Profit and Loss Account and Balance Sheet||Its main tools are accounting concepts, rules, conventions, and standards.|
|Function||To determine the net result and financial position of a business and to communicate financial reports to all interested parties.||To aid in decision-making based on the information furnished by book-keeping and accounting and to prescribe rules and concepts of accounting.|
In conclusion, ‘accounting’ is concerned with the collection, measurement, processing, and analysis of business transactions and communicating such information to all stakeholders, whereas ‘accountancy’ is a field or branch of study. The principles of accountancy are applied to business enterprises in three main divisions namely, book-keeping, accounting, and auditing.
Accountancy is a wider concept that serves as a guide for preparing accounts, summarizing details, and presenting the financial findings to all parties concerned.