Difference between accounting and economics
accounting vs economics:
While accounting and economics are indeed interrelated, they are by no means the same. They are different fields of studies that do overlap each other in certain ways and therefore, they are indeed worth getting some insight in to.
What is accounting
Accounting can be described as the precise and methodical recording, assessment and reporting of a company’s financial deals. This includes providing data, measuring the performance of the firm, interpretation of financial statements, assessing its financial position and also, paying taxes, etc. these financial records are maintained through a method called bookkeeping which presents all the day to day financial activity of the company in detail. Accounting is also best described as the voice and the heart of business as it is these financial documents prepared by the accountant which circulates through out the company hierarchy and it is according to these documents that the public views the performance of the company and the authorities make the key decisions. These reports which come in the form of financial declarations such as balance sheets, income declarations which is also comprised of the profit and loss accounts, and the declaration of changes in financial position aid the financial directors to analyze the previous performances and also to perform certain legal responsibilities such as paying taxes, etc.
An accountant is responsible for planning the budget of a company as well as offering financial advise on favorable investment opportunities for a company. They also prepare tax returns, financial documents, documents regarding bills, profits and all other financial interactions of the company as required and at the same time, keeping an organized track records of all financial transactions of the company up to date which is also known as bookkeeping.
An accountant in charge of such a range of duties are required to possess qualifications such as Chartered Accountants (ACA), Chartered Certified Accountants (ACCA), Chartered Institute of Management Accountants (CIMA) or Associate of Accounting Technicians (AAT) which in turn proves that he or she has obtained a minimum standard required for accountancy. It also means that these individuals hold professional indemnity insurance and that their work is being monitored for its quality by the professional body to which they belong which in turn ensures a safe and a reliable service on their part.
What is economics?
The term Economics, derived from the Greek word oikonomia which means “management of a household, or administration, can be defined as a social and behavioral science which concentrates on the scarcity of resources and also society’s means of production, development and also the consumption of those products or services. By the turn of the century, economics have indeed expanded in many ways, extending itself to many aspects of life such as education, family, health, etc.
What is the difference between economics and accounting?
While certain concepts such as profit, cost and depreciation exist in both accounting and economics, certain concepts possess substantially different meanings and interpretations. Therefore, while accounting focuses on a more practical approach of preparing data for analyzing, economics is considered as a science which focuses on the analyzing of the economy itself. Therefore, accounting makes up an integral part of economy by providing the data that economists need to analyze in order to come to certain solutions.
While economics is often criticized because of its use of assumptions and interpretations, accounting is more based on facts. Accounting makes use of certain principles which indeed support and prove its actions whereas economics depends solely on its assumptions which are partly based on their own interpretations of what the accountants deliver.
While economics makes use of assumptions, accounting is based on solid facts which are deemed to be more reliable.