In general, accounting and accountancy are mistakenly considered the same. However, there is a difference between them. Accountancy is basically an appropriate knowledge of accounting. It defines how the different techniques and principles of accounting are to be adopted in accounting. It provides us with knowledge of preparing books of accounts, summarizing, interpreting, and communicating the business results to its users. According to Kohler, “Accountancy refers to the whole body of the idea and practice of accounting”.
Accounting in a very simple sense is maintaining a record of varied activities. Thus, Accounting is some things that are used almost by everyone in their daily lives. In our lifestyle, we maintain a record of varied transactions or activities. After going through this lesson you will understand Accounting Definition.
Accounting may be a process of identifying the events of monetary nature, recording them in Journal, classifying them in their respective ledgers, summarising them in Profit and Loss Account and Balance Sheet, and communicating the results to its users like proprietors, government, creditors, investors, etc.
Difference between Accounting and Accountancy
| Point of Distinction | Accounting | Accountancy |
|---|---|---|
| Key Area | It is a function of identifying the events of financial character, measuring them in terms of money, recording them in the books, and lastly classifying them. | Accountancy is basically appropriate knowledge of accounting which defines how the accounting principles and techniques are to be followed. |
| Purpose | The main purpose is to find out the net results and financial status of the business and communicating the results to its various users. | The main purpose of accountancy includes explaining principles and techniques that need to be followed in accounting |
| Scope | Accounting is narrow in scope. It starts where bookkeeping ends. | It is wider in scope because it explains the principles and techniques that are required to be followed in accounting and includes both accounting and bookkeeping. |
Also, Read Accounting Definition