Class XI – Accounting versus Accountancy
Accounting is simply the process of recording all the business transactions of a financial year, it starts where the bookkeeping gets stops.
Accounting can be defined as the process in which all the daily transactions of a company or the financial institution are recorded and with the help of those records, the preparation of the financial statement is done so that those statements can be presented in the simplest and the easiest possible manner.
Accounting is a discipline that is based on many different terms, rules, principles, and the standards which are needed to be followed so to obtain the required information for the decision-making process.
Accounting consists of some basic terms:
- Summarizing the data: In this step, all the financial transactions are recorded and summarized at one place.
- Analyzing the data: After summarizing the data the different specialists analyze the data
- Interpreting the data: After the analysis of the data have been completed the interpretation of the data is done. In this step all the information collected from the previous steps is forwarded.
- Communicating the information: After successful completion of the above steps the information which is required by the different investors and other businesses entities is communicated to them.
In simple terms, accountancy tells us for what reason and in what way the firm prepares its financial accounts and also in what manner does the information collected by recording all the transactions are being summarized and communicated to the interested parties
Accountancy can be defined as the systematic knowledge of accounting which focuses on the principle of gathering all the prevalent information and using the financial data.
Accountancy is the body of knowledge consisting of certain rules and principles to be kept in mind while recording all the transactions, and classifying and summarizing those financial transactions. Accountancy is much wider in scope as compared to the accounting. Also, it depends both on the accounting and the bookkeeping.
Accounting consists of all the complete knowledge of the subject as it contains both the conceptual as well as the practical implementation to maintain the books of accounts.
Accountancy gives accounting a framework and practices which an accountant makes use of to collect identify and record all the financial as well as the non-financial transactions. Hence, it helps the interested parties such as shareholders, managers, and the directors to get the required information in monetary terms and also the information about all the economic resources under the control of the management.
Accounting vs Accountancy:
Accounting is the process that involves recording, classification, summarizing, presenting, and interpreting the financial information of an organization.
Accountancy is the body of knowledge that helps in measuring, processing and recording the non-financial and financial statements.
Accounting is Narrower In scope.
Accountancy is Wider In scope.
Accounting depends only on the bookkeeping.
While accountancy depends on both the accounting and the bookkeeping.
Accounting is the nature of work performed.
Accountancy is opted as a profession.
It only contains the practical part.
It contains both the theoretical as well as practical parts.
Accounting is a concept that is totally based on the knowledge of the accountancy.
Accountancy is the field of knowledge that is considered to be the route to accounting.
Accounting mainly focuses on the specified process of recording all the daily transactions and creating the reports on that basis.
Accountancy focuses on the broader principles without going into the depth.
Accounting is used to understand the net income and financial position of a business and to present them to concerned parties.
Accountancy involves the decision-making function which relies on the knowledge got from the accounting.
Financial statements are the major tools of accounting.
Techniques and principles are significant tools of accountancy.