By Michael Feder
If you are interested in an accounting, bookkeeping, management or finance career, or if you have already begun your education in one of these fields of study, you have undoubtedly come across two related but distinct terms: accounting and accountancy.
Many people use the terms interchangeably, but there are some important differences. In broad terms, accountancy covers the principles that guide the creation and use of financial records, while accounting refers to the process of maintaining those records. Accountancy can cover areas such as forecasting, budget planning and cost analysis, which are important concepts for those who want to be executives and business managers.
Here is a closer look at accounting and accountancy and their relevance to business professionals.
Accounting is the process of creating financial records and reports for a business or an organization. Depending on their job duties, accountants might record transactions or use software to simultaneously record income and spending while also populating financial statements.
A bookkeeper usually handles administrative tasks such as creating invoices and recording transactions on a spreadsheet. An accountant focuses on using this data to create reports and perform other functions that inform a company’s decision-making.
Some common objectives for an accounting professional are:
These statements are necessary for reflecting the financial health of a company to executives, shareholders and other decision-makers. Publicly traded companies also have to publish their statements for the public.
For example, an accountant might add up all the costs of creating a product or offering a service, including marketing, research and development, and manufacturing costs. This process can help decision-makers come up with a fair price for the product or service.
Accountants usually work with advanced software and database applications that help them find and organize financial data and create reports and visual aids.
An accounting career requires specialized training. The first step on this professional path is enrolling in a bachelor’s degree program. In an accounting degree program, you learn the generally accepted accounting principles (GAAP) and other record-keeping and reporting practices.
Many employers will hire applicants who have a bachelor’s degree in accounting. There are also associate degrees in accounting or bookkeeping for those seeking an entry-level job. Finally, you can improve your chances of career enhancement with a master’s degree in accounting or an MBA.
Professional designation is also available for accountants. You can obtain this designation by passing an exam to become a certified public accountant (CPA). Each state has its own additional requirements for CPA licensing. Most also require a bachelor’s degree in accounting.
Though some employers do not require you to be a CPA, licensing is necessary for certain positions. For example, to submit reports to the SEC, you must be a certified public accountant.
You will learn the fundamentals of accounting during an undergraduate degree program. In their careers, however, accountants might focus on one or more types of accounting.
Here are eight varieties of accounting that you could encounter in your career.
Large companies or accounting firms may have specialist accountants who focus on specific areas, while other employers will hire generalists who can work on different types of accounting.
Accountancy focuses on the principles for gathering and using financial data. Accountancy gives accounting a framework and practices, which accountants can use to identify, collect, record and report financial information. Other related professions, such as bookkeeping, also fall under the broad umbrella of accountancy.
Additionally, accountancy involves the analysis of financial activity using accounting data. If you work as a business manager, you need to know about accountancy. If you become a business manager, you will use specific principles in the field of accountancy to make informed decisions based on financial reports and data collected by bookkeepers and overseen by accountants.
Accountancy lays out specific principles for the collection and use of financial information. Accountants learn these principles and put them into practice in real-world situations to record financial transactions and create reports.
GAAP is an example of the intersection of accountancy and accounting. Accountants, bookkeepers and auditors need to use these principles while performing their jobs.
Accountancy principles are useful for accountants, but you cannot get a degree in accountancy. In addition to a bachelor’s in accounting, you can study business management, finance and bookkeeping, which are fields that also use the principles of accountancy.
Here are some differences between accounting and accountancy besides degree availability.
Despite these differences, accounting students will become intimately familiar with the principles of accountancy during their undergraduate studies and in their careers.
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