What is accountancy
What’s the meaning of accountancy?
Accounting is the process of recording financial transactions related to a business.
What is an accountancy example?
- For example, a business sends an invoice to one of its clients.
- The accountant using the double-entry method records a debit to accounts receivables.
- When the client pays the invoice, the accountant credits accounts receivables and debits cash.
- Double-entry accounting is also called balancing the books, as all of the accounting entries are balanced against each other.
- If the entries aren’t balanced, the accountant knows there must be a mistake somewhere in the general ledger.
Accountancy v/s Accounting
- Accountancy is the systematic field of knowledge related to accounting, including the rules and principles.
- The term “accountancy” refers to the study, principles, and theory of accounting
- The term “accounting” is commonly used for all accounting practices and procedures in the application.
- The accounting process includes summarizing, analyzing, and reporting these transactions.
- 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.
Type of accounting
Financial Accounting
the processes used to generate interim and annual financial statements. The results of all financial transactions that occur during an accounting period are summarized in the balance sheet, income statement, and cash flow statement.
Managerial Accounting
In managerial accounting, an accountant generates monthly or quarterly reports that a business’s management team can use to make decisions about how the business operates.
Cost Accounting
cost accounting considers all of the costs related to producing a product. Analysts, managers, business owners, and accountants use this information to determine what their products should cost.
Tax Accounting
Tax accounts balance compliance with reporting rules while also attempting to minimize a company’s tax liability through thoughtful strategic decision-making.
Importance of Accounting
- Accounting is necessary for company growth
- Accounting is necessary for funding
- Accounting is necessary for owner exit
- Accounting is necessary to make payments
- Accounting is necessary to collect payments
- Accounting may be required
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