Accountancy is wider in scope than bookkeeping and accounting, it is the entire body of theory and practice of accounting. It consists of the guiding principles and rules of bookkeeping and accounting.
Accounting begins where bookkeeping stops. It summarize the classified transactions and analysis and interpreting the summarized result and communicate the information to interesting parties to enable them make decision.
The following are the characteristics of Accounting
- It deals with recording, classifying and summarizing of financial transactions.
- It is narrow in scope.
- It depends on Bookkeeping.
- The main function of accounting is to ascertain the net results and the financial position of the business and to communicate them to interested parties.
Accountancy can be defined as the systematic knowledge of accounting that relates with the principle and technique which are applied in accounting system. Accountancy tells us how to prepare the accounts, summarize its information and communicate it to interesting parties.
Accountancy is the entire body of the theory and practice of accounting and has the following functions
- It is a body of knowledge prescribing certain rules or principles to be observed while recording, classifying and summarizing transactions.
- It is wider in scope.
- Accountancy depends both on bookkeeping and Accounting.
- It includes the decision making function.
- It is the basis of information provided by book-keeping and Accounting.
Accountancy is the process of communicating financial information about a business entity to interested parties such as shareholders, board of directors and managers. The communication is in form of financial Statement that show in the money terms the economic resource under the control of management the art lies in selecting the information that is relevant to users and is reliable. The principle of accountancy are applied to business entitled to three division of practical art named accounting , book-keeping and auditing.
The american institute of certified public accountant (AICPA) defines accountancy as the systematic art of recording, classifying, interpreting and summarizing money transaction and event which are at least of financial character and interpreting the result thereof.
What Is Difference Between Accounting And Accountancy?
In this part of this article, We will study about the differences between accounting and accountancy through the following basis:
Accounting deals with the process with recording, classifying, analysing and summarizing transactions while accountancy is a body of knowledge prescribing certain rules or principles to follow while recording, classifying, analysing and summarizing transactions.
The scope of accounting is narrower than accountancy but wider than bookkeeping while the scope of accountancy is wider than accounting.
Accounting depends majorly on bookkeeping while accountancy depends on both bookkeeping and accounting.
The main function of accounting is to determine the net income and financial position of a business and to communicate them to interested parties whereas accountancy includes the decision making function also based on information made available by accounting.
5. MAIN TOOLS
The main tools in accounting are income statement and Balance Sheet whereas the main tools in accountancy are Concepts, Conventions, Rules and so on.
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