What is the difference between accountancy and commerce?
Because they are similar in their meanings, people often confuse the terms of accountancy and commerce. Accountancy refers to the process of communicating the financial information about a business to its shareholders or anyone who has a vested interest in the business. Commerce refers to the activities of the business – what it does to make money. It is the sale of goods or services that satisfy the needs of those who purchase the goods or services.
In accountancy, the communication takes the form of written documents – financial statements. The information presented in these statements must have relevance to those who receive it so that they can have a clear picture of how the business is doing financially – Is it making money or is it losing money? The economic value of commerce is always reflected in the sale and trade of goods or services.
There are several different branches of accounting in the whole field of accountancy. A few examples are cost accounting, forensic accounting, financial accounting, management accounting and tax accounting. There are also different types of commerce that can be carried out within a country. Some examples of the various types of commerce are legal, cultural, political and technological.
If you look up the definition of the term accountancy in a dictionary, you will find that it means “the profession of being an accountant or the work that an accountant does.” However, the American Institute of Certified Public Accountants (AICPA) defines accountancy in a very detailed way. According to this institution, it means “the act of recording, classifying and summarizing all the financial information related to the money, transactions and events that are part of the dealings of a business.”
Commerce has a direct relationship to a state’s or a country’s economy and the economic status that it has with respect to the rest of the world. It influences the business and business prospects of a country. It is mainly concerned with the barter of goods from producers to consumers.
Accountancy is the language of commerce. It is the way in which the business transactions are translated into numbers. These numbers are of particular importance to the shareholders and owners and indirectly to all who depend on the business for their livelihood.
Commerce is a broader concept than accountancy and is abstract. Accountancy is more tangible since it can be seen in the paperwork.