Financial Reporting: Several reporting frameworks, most notably Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), etc. Tracking of financial transactions: In business organization, various transactions are entered and collection and analyzing of each such transaction needs separate accounting procedures.ģ. It is concerned with the recording of transactions in an orderly manner, soon after their occurrence in proper books of accounts.Ģ. Record keeping: The system of record keeping of financial transactions requires the use of standard set of accounting policies, practices and procedures, as well. The term accountancy is used for the profession of accountants – one who does the work of accounting whereas, accounting is the systematic process of recording all business transactions and translating all intangible reports for its intended use by the user. Generally, the terms accounting and accountancy are used interchangeably but there is a thin line difference between these two items. Difference between Accounting and Accountancy Definition of AccountingĪccording to American Institute of Certified Public Accountants (AICPA),‘Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character and interpreting the results thereof’. The need for recording business transactions in a clear and systematic manner is the basis which gives rise to Accounting. How can I change the way I operate to make more profit?Īll the above and several other questions are answered with the help of accounting.Should I put more money in my business or sell it and go into another business?.How much do the business owe to others?.How much amount is payable to suppliers on account of credit purchases?.How much amount is receivable from customers to whom goods have been sold on credit?.Am I making or losing money from my business?.What is the result of the business transactions?.Thus, the details of the business transactions have to be recorded in a clear and systematic manner to get answers easily and accurately for the following questions at any time the businessman likes: But, if the business man notes down his incomes and expenditures, he can readily get the required information.
A large number of business transactions take place, because of which it is not possible to recall by the businessman with his memory as to how the money had been earned and spent. At the year end, the businessman would like to know the progress of his business. These activities help in carrying out the operation of the business. He also spends money on certain items like purchase of goods, salary, rent, electricity, insurance etc. In a business, the businessman receives money from certain sources like sale of goods, interest on bank deposits etc. The objective doing every business whether large or small is to earn profit. It is necessary to have a good knowledge of accounting-grammar (in the shape of construction of accounts, conventions, concepts, postulates, principles, standards etc.) to interpret accounting information for purposes of communication, reporting, decision making or appraisal. Just as the business enterprises (like firms, companies, societies and institutions keep their accounts, so can the nations and even the individual owners of the business and profession entities. Legal entities ranging from individual to governments use and prepare accounting to obtain information on the financial condition and performance of the entity in question. Now, although accounting is generally recognised with the business, trade and profession, the business enterprise is not the only kind of organisation that makes use of accounting. As the individual business enterprises keep their accounting records separately, the offer to communicate is essentially from a business enterprise to various individuals, groups and institutions that are having interest in the operations and results of that enterprise.
In the same way, the accounting language serves as a means to communicate matters relating to various aspects of business operations. It is effectively employed to communicate the financial performance of business to various interested parties or stakeholders. In a simple term the language is the means of communication of ideas or feelings by the use of conventionalized signs, gestures, marks and articulated vocal sound. In general Accounting is considered as the language of business throughout the world. Relationships of accounting with other disciplines
Difference between Accounting and AccountancyĢ0.
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