Although accounting and accountancy are often used interchangeably, each term has its own unique definition and practical uses.
Before diving into the differences, it’s worth noting that both accounting and accountancy involve recording financial transactions, maintaining accurate records, analyzing financial data and interpreting the results. These tasks are essential to modern for-profit businesses, government agencies and nonprofit organizations, which is why earning an online Master of Accountancy can be a valuable steppingstone for students and midcareer professionals alike. But as individuals hunt down their dream jobs, they may ask themselves: What is the difference between accounting and accountancy?
Definition of Accounting
Defining the word “accounting” requires context due to its versatile usage. For instance, accounting can describe the actual practice of accounting, which the financial website Investopedia defines as “the process of recording financial transactions pertaining to a business.” It can also be used as a blanket term for the accounting profession, which comprises individuals working in a wide range of roles associated with accounting practice, such as bookkeepers, accounts payable specialists and payroll administrators. From an academic standpoint, accounting could be used to describe a specific degree program designed to prepare individuals for a role in the accounting field.
Definition of Accountancy
In the most basic sense, accountancy is the “work or profession of an accountant,” according to the Oxford Learner’s Dictionary. The website Trending Accounting offers a broader definition of the term, describing it as “the systematic knowledge of accounting that relates with the principle[s] and technique[s] which are applied in accounting system[s].” In popular usage, however, the term “accountancy” is often a way to distinguish degrees focused on the academic side of the field, such as a Master of Science in Accounting, from the professional degrees through which most accountants are trained.
“Accountancy” also is often used as an umbrella term to encapsulate several areas of real-world financial statement management, including preparation, compilation and review. Preparing a financial statement or balance sheet is accounting; interpreting it or deciding what to do with it is accountancy.
Differences Between Accounting and Accountancy
The primary difference between accounting and accountancy is one of scope. Accountancy is the systematic field of knowledge pertaining to accounting, including the rules and principles that govern actual accounting procedures. The act of accounting is a subset of accountancy that involves the practical application of accountancy principles to execute the profession’s core duties.
In other words, accountancy deals with the conceptual, and accounting deals with the practical. The term “accountancy” refers to the study, principles and theory of accounting, while the term “accounting” is commonly used for all accounting practices and procedures in application. It is worth noting, for example, that accountancy includes any decision-making process that might follow the preparation of an income statement, whereas accounting deals with the preparation of the income statement itself.
What Is Accounting in Practice?
When put into practice, the concept of accounting is a multiphase process. The first phase of this process is often assigned to bookkeepers, as accounting typically starts when financial information is recorded and organized. These financial records are used by accountants, financial analysts and other professionals to analyze business performance and expenses, summarize cash flows and revenue streams, interpret financial data, and help key decision-makers maximize future investments.
There are different types of accounting to consider. Financial accounting involves the preparation of financial statements — such as balance sheets, income statements and cash flow statements — for internal and external stakeholders. Managerial accounting involves similar functions, but the information is intended primarily to help internal stakeholders make informed business decisions. Cost accounting uses this same data to inform decisions related to the cost of producing specific products or services, right down to how they should be priced at the consumer level.
What Is Accountancy in Practice?
Accountancy includes the measuring, processing and communicating of financial information; managing of detailed financial records; preparation of tax documents; and tracking of an entity’s economic resources.
In practice, the principles of accountancy are identical to the basic accounting concepts students learn in their undergraduate and graduate studies. Accountants, auditors and bookkeepers working for publicly traded companies must adhere to a standardized set of rules — referred to as generally accepted accounting principles (GAAP) — set by the Financial Accounting Standards Board (FASB). These principles are as follows:
- Principle of Regularity — The organization’s accounting upholds GAAP standards.
- Principle of Consistency — The organization’s accounting processes and standards are uniform.
- Principle of Sincerity — The organization’s accounting provides accurate financial records.
- Principle of Permanence of Methods — The organization’s accounting practices are consistent.
- Principle of Noncompensation — The organization’s total performance is fully reported without an assumption of debt compensation.
- Principle of Prudence — The accounting data recorded is realistic and timely.
- Principle of Continuity — The short-term and long-term financial data classifications are based on the notion that the organization’s business will continue.
- Principle of Periodicity— The periods of accounting are consistent and routine.
- Principle of Materiality — The value of all assets are set at cost, and all financial reports are based on the truth.
- Principle of Utmost Good Faith — Everyone involved in the accounting process is acting with honesty.
The FASB’s standards are also adopted by many non-publicly-traded companies to ensure consistency and transparency around accounting practices.
What Is an Accountant?
Accountants are financial professionals who carry out several key functions related to a company’s finances and overall financial health. Their responsibilities run the gamut, from auditing financial statements and preparing tax returns to suggesting investment strategies. Accountants may even develop and propose various ways to improve an organization’s financial efficiency.
Accountants may work as part of an accounting firm or exclusively for a large company. Because of the essential nature of their role, they can work in any number of industries and sectors, including government agencies and nonprofit organizations.
Those seeking to expand their employment opportunities in the accounting field may consider obtaining certification as a certified public accountant (CPA). This credential can help candidates stand out in a competitive job market, as publicly traded companies are required to have their records audited by a CPA.
Careers in Accounting
The differences between accounting and accountancy are subtle. Regardless of which term is used, the job market for professionals in this field is promising.
Employment of accountants and auditors is expected to grow 7% from 2020 to 2030, adding nearly 100,000 new jobs during that period, according to data from the U.S. Bureau of Labor Statistics (BLS). Individuals entering the profession can pursue a variety of roles, including financial or managerial accountants, internal or external auditors, or government accountants.
The median annual wage for accountants and auditors was $77,250 in May 2021, according to the BLS. Accountants in the finance and insurance industry earned the highest wages, with a median salary of $79,310.
Aspiring students and professionals looking to advance their careers have plenty of job opportunities available, but getting a focused education is always the first step to joining any specialized workforce.
How a Master of Accountancy from the University of Nevada, Reno Can Help Kick-Start Your Career
The online MAcc program at the University of Nevada, Reno, explores the fundamentals and complexities of advanced accounting principles, taxation laws, financial analysis and more to give students an edge in today’s competitive job market.
Through the MAcc program, you can learn a broad range of skills and abilities needed to comply with legal, ethical and regulatory standards while developing actionable solutions to a variety of operational and financial challenges. Students also gain firsthand experience with accounting systems, data transformation, SQL and other industry software that is vital to digital organizations’ long-term success.
To learn more, explore our program page or contact an enrollment adviser today.
How to Prepare for the CPA Exam
What Is Managerial Accounting?
American Institute of Certified Public Accountants, “Everything You Need to Know About the CPA Exam”
Indeed, “12 Entry-Level Accounting Jobs (with Salaries and Job Duties)”
Investopedia, Financial Accounting Standards Board (FASB)
Investopedia, “What Is Accounting?”
Office of Justice Programs Territories Financial Support Center, Generally Accepted Accounting Principles (GAAP) Guide Sheet
Oxford Learner’s Dictionaries, Accountancy
Trending Accounting, “Difference Between Accounting and Accountancy”