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Differences Between Accounting vs CPA
What is Accounting?
- Accounting is basically the recording and reporting of financial transactions. Anyone who does accounting functions can call themselves an accountant, even without a professional degree in accounting, although usually, an accountant does have an accounting-related degree.
- Often, accountants with no certification perform tasks such as bookkeeping, looking after general accounting matters and taking care of some tax-related matters. However, all accountants with some training and experience can perform an extensive range of services.
What is CPA?
- A Certified Public Accountant (CPA) is an accountant who has met state licensing requirements. Requirements for CPA vary by state, they include minimum education (usually a bachelor’s degree in accounting) and experience requirements, plus passing the CPA exam.
- The Uniform CPA examination is administered by the American Institute of CPAs (AICPA) which has four sections: Regulation, Financial Accounting and reporting Business Environment and Auditing. The CPA qualification is considered by many organizations to represent the commitment of an accountant to meeting high standards.
- While all CPAs are accountants, not all accountants are CPAs.
Let us discuss the differences between Accounting vs CPA in detail –
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Accounting vs CPA Infographics
Here we provide you with the top 9 differences between Accounting vs CPA
Accounting vs CPA Key Differences
Here are the key differences between Accounting vs CPA –
#1 – Licensing
- CPAs have to pass rigorous testing and strict requirements for licensing in the state in which they intend to practice. CPA candidates must complete required hours of institute coursework, including specific hours in accounting, auditing, taxation, and business core classes.
- After graduation and a year of experience under the supervision of a CPA, candidates must take and pass the comprehensive test of tax, auditing, and general accounting skills.
- After getting a license, CPAs must take continuing education classes throughout their career in order to remain up-to-date with the information on issues and changes in the accounting world.
#2 – Fiduciary Responsibility
- CPAs are considered some of the business world’s most trusted advisers according to a survey conducted by the AICPA.
- Many businesses that are required to have a financial statement audit will find that only a CPA is capable to perform these services and issue the required reports.
- In addition, CPAs are considered the one with a legal duty and power to act on behalf of, and in the best interest of, their clients. Non-CPA accountants are not considered to be fiduciaries to their clients.
#3 – Taxes and Regulations
- Accountants without a CPA certification may prepare a proper tax return, but a CPA provides distinct advantages to clients that non-CPAs cannot provide.
- Many CPAs are more knowledgeable in tax codes because of the rigorous CPA licensing examination and continuing education requirements. Another important factor is that CPAs are eligible to represent clients before the IRS, while a non-CPA accountant is not.
#4 – State Requirements and Codes of Ethics
- CPAs are also expected to follow a strict code of ethics and meet the high standards of the profession, as having the license is not the only requirement to be a CPA.
#5 – Cost and Expenses
- The cost and expenses in pursuing CPA are higher when compared to pursuing accountancy course/certifications.
Accounting vs CPA Head to Head Differences
Now, let’s look at the head to head differences between Accounting and CPA
|Basis of Comparison between Accountants vs CPA||Accounting||CPA|
|Meaning||Accounting is a processor work of keeping financial accounts. An accountant is a person whose job is to keep financial accounts.||A Certified Public Accountant (CPA) is an accountant who has met state licensing requirements.|
|Attestation||Accountant cannot provide attestation services.||You are required to have a CPA license to provide attestation services.|
|Licensing||No License is required to be an accountant.||The license is required to be a CPA.|
|Standing before IRS||Accountant has no standing with the IRS (Internal Revenue Services)||CPAs can represent a taxpayer before IRS (Internal Revenue Services)|
|Signing Tax Returns||Accountant cannot sign tax returns or represent clients during tax Audits before IRS.||CPAs can sign tax returns and also represent clients during tax audits before IRS.|
|Governing Body||No specific Governing Body.||Governing body for CPAs is American Institute of certified public accountants.|
|Cost||Low cost compared to CPAs.||Comparatively Higher Cost.|
|Salary||Salary of an accountant is comparatively lower than CPAs.||Salary of CPAs is higher when compared to an accountant.|
|Conclusion||All accountants are not CPAs.||All CPAs are accountants.|
Accounting vs CPA – Final Thoughts
- When it comes to which is better between the two, I can say both are the best at their places depending on your priorities, time and cost involved. If you opt for CPA you will go through with international laws, principles, and standards. Passing CPA exam is comparatively tougher than any accountancy certification.
- Accounting is basically the process of recording and reporting of the business and financial transactions. Anyone who does that function can call themselves an accountant.
- Obtaining the CPA license is a bit more difficult and will take more time, you can see that it is definitely worth it.
- Accountants mainly prepare three types of financial statements:- audited, reviewed, and compiled. Non-CPA can only prepare a compiled financial statement. Only a CPA can prepare an audited financial statement or a reviewed financial statement. Small businesses generally may not require an audited or reviewed financial statement but public companies are required to publish audited statements. When individuals or businesses make this decision of choosing between a CPA and an accountant, this is one of the important considerations they take into account.
This has a been a guide to the top differences between Accounting vs CPA. Here we also discuss the Accounting and CPA key differences along with Example, Infographics, History and comparison table. You may also have a look at the following articles –