Difference between accounting and accountancy

Have you ever wondered whether there is a difference between accounting and accountancy? Although the words sound similar, there is a marked difference between them. Moreover, according to the Institute of Chartered Accountants of India (ICAI), although both fields are essential in the business world, they serve different purposes. 

This article will, thus, take you through the distinction between the two to help you make an informed decision about your career.

What is accounting?

Accounting is basically the process of recording, classifying and summarizing financial transactions. For instance, the preparation of financial statements like income statements and balance sheets reflecting the financial position of a business entity is part of accounting.

Key functions of accounting:

1. Recording transactions – Documenting financial transactions like purchases, sales, and expenses.

2. Financial reporting – Preparing statements that reflect the company’s financial health.

3. Compliance – Ensuring that financial activities comply with laws and regulations, including tax requirements.

Accounting is, thus, essential for the day-to-day financial operations of a business. The stakeholders, investors, and regulatory bodies require accurate financial data, which is provided by this professional.

Check out: How to become an Accountant?

What is accountancy?

Accountancy is a broad-based term that covers both practical and theoretical aspects of accounting. While accounting forms the basis of accountancy, it also incorporates strategic decision-making, financial management, and the application of accounting principles in relation to long-term planning.

Key functions of accountancy:

1. Strategic financial planning – Such as guidance on investment decisions, cost management and financial forecasting.

2. Business analysis – This involves analyzing financial data to identify trends, inefficiencies or opportunities for growth.

3. Ethics and regulation – It ensures that all financial activities are executed in line with professional standards and regulatory requirements.

Accountancy professionals tend to be more advisory in nature at their workplaces, assisting organizations to run their finances strategically and ethically.

Key differences between accounting and accountancy

The following are common differences between accounting and accountancy are as follows:

Scope of work

• Accounting: It is mainly concerned with keeping records and disclosing monetary transactions to the public.
• Accountancy: It combines practical accounting functions with strategic financial management, which looks at long-term plans in terms of business growth and development.

Career roles

• Accounting is about accountants, auditors, and tax professionals whose job involves handling everyday monetary transactions.
• Accountancy constitutes higher-level financial analysts, management accountants, and consultants who offer advice to companies regarding future growth strategies.

Focus of work

• Accounting: Involves precise record-keeping, focusing on accuracy and compliance.
• Accountancy: Combines financial reporting with business advisory services, requiring a deep understanding of financial theory.

Why it matters to understand the accountancy vs. accounting difference in finance

In finance, recognizing the difference between accounting and accountancy is important for anyone who wants to build a successful career in this field. 

Do you love working with numbers, managing transactions and ensuring compliance? Accounting could be your area of interest, then! However, if you aspire to provide business insights or give strategic advice alongside managing long-term plans for a company, then accountancy would work for you better.

In India, there has been a growing demand for both professionals within these fields due to its booming economy, which requires competent accounting professionals, including accountancy ones, according to the ICAI.

The Online Manipal advantage

Do you wish to advance in finance and accounting? Online Manipal gives you an opportunity to learn how to succeed in both fields by offering an online BBA in Finance & Accounting. This program from Manipal University Jaipur (MUJ) has been designed with comprehensive modules that cover areas like financial management taxation, making it possible for you to perform well either as an accountant or a financial analyst once the market players employ you.

Online Manipal can thus help you achieve your career goals, whether in accounting or accountancy.

The bottom line

As we have established in this article clearly now, accounting is the act of recording and reporting financial data, while accountancy involves management alongside strategic decision-making. This renders accountancy a broader area.

Understanding the differences between the two will enable learners to decide which finance-related profession to pursue.

If you are looking for a career in accounting or finance, consider taking Online Manipal’s online BBA program in Finance & Accounting and illuminate your career prospects. Take the first step today!

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