Menu Close

Differences Between Bookkeeping and Accounting

Distinguishing between bookkeeping and accounting is important because they’re not completely interchangeable.

Bookkeeping refers mainly to the record-keeping aspects of accounting — the process of recording all the detailed information regarding the transactions and other activities of a business.

Bookkeeping is an important sub-branch of financial accounting. Indeed, bookkeeping may be regarded as the foundation on which the entire discipline of accounting is built.

key differences between bookkeeping and accounting

On the other hand, Accounting focuses on the periodic preparation of three main types of financial statements (Balance Sheet, Statement of Profit/Loss and Cash-flow Statement).

Key Differences between Bookkeeping and Accounting

Basis Bookkeeping Accounting
Book-keeping involves - (a) Identifying the transactions, (b) Measuring the identified transactions,(c) Recording the measured transactions,(d) Classifying the recorded transactions.
In addition to book-keeping, Accounting involves- (a) Summarizing the classified transactions,(b) Analyzing the summarized results,(c) Interpreting the analyzed results, and (d) Communicating the information to interested parties.
Book-keeping is the primary stage,
Accounting is the secondary (summarizing)
Basic Objective
Purpose of book-keeping is to keep systematic record of transactions and events of financial character in order of its occurrence.
Purpose of accounting is to find results of operating activity of business and to report the financial strength of a business.
Book-keeping is done by Junior Staff
Accounting work is performed by Senior Staff
Nature of job
The job of a Book-Keeper is often routine and clerical in nature.
The job of an Accountant is analytical in nature.
Designing of System
It does not cover designing of the accounting system.
It covers designing of the accounting system.
The Book-Keeper does not supervise and check the work of an Accountant.
An Accountant supervises and checks the work of a Book-Keeper.
Financial Statements
Financial Statements do not form a part of the book-keeping.
Financial Statements are part of the accounting process. These statements are prepared based on book-keeping records
Managerial decision
Managerial decisions cannot be taken with the help of book-keeping records alone.
Management can take decisions on the basis of accounting records and statements.
There are no sub-fields for Book-Keeping.
It has several sub-fields such as Financial Accounting, Management Accounting, etc.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *