8 Difference Between Bookkeeping and accounting

Bookkeeping and accounting are the two terms which are used for the record and analysis of financial transactions. Bookkeeping is the systematic record of financial transactions in a proper business book. It is a process in which transactions are organized and summarized. While according is a complete process of interpreting and reporting all the financial transactions of the business. Accounting is used for the balance sheet as data.

Bookkeeping and accordingly is very important to track all financial transactions. Both this records all incoming and outgoing cash and amount. It also tracts the purchase and sell of the business and the company. There are many differences between bookkeeping and accounting so it’s very important to understand. In this article we will discuss bookkeeping and accounting in detail. We will also discuss the difference between bookkeeping and accounting. There are many other terms which are related to bookkeeping and accounting. Let’s begin the article.

Bookkeeping vs accounting

Sr. No.	Bookkeeping	Accounting
1	Recording the financial transactions	Is the identifying, recording, summarizing, classification and communicating financial transactions
2	No financial statement is prepared	Financial statement is prepared in accounting.
3	Not used for decision making.	Used to make financial statements.
4	No need to analyze the data	Accounting helps to analyze the financial data.
5	Does not show the position of the company.	Presents the position of the company
6	Is not used by the investors and the users of the company.	Used by the investors and users of the company.
7	No need for high level skill	Needs a high level of skills.
8	First step of accounting	The first step for the balance sheet.

Bookkeeping

It is the process of recording and summarizing the transactions of a firm and company in a systematic form. Bookkeeping is prepared for the current financial year. The main purpose of the bookkeeping is to record data with 100 % accuracy. Bookkeeping is a base for accounting. Accuracy is very important in the bookkeeping because it contains financial information of the company.

Bookkeepers maintain and prepare the Bookkeeping. Financial statements are not made in bookkeeping. Bookkeeping is a simple form of recording of the transactions so no need for higher education to understand or maintain the bookkeeping.

Some steps are followed for the bookkeeping which is shown below.

1. Recognition of the financial transactions.
2. Recording the transactions.
3. Preparing leaders for all accounts.
4. Preparing for trial balance.

Accounting

Accounting is considered as a language and backbone of the business.it is a well-organized and systematic way to record analysis and Summer the transaction of the business. Accounting is a main source for the stakeholders to identify the position of the business. It used to make big financial decisions. All the investors and the government get the financial information from the accounting of the company. Financial statement is prepared in accounting. A Person who maintains accounting is known as the accountant.

Accounting is the backbone of the business which shows all the information of the company. Accounting includes the all incoming and outgoing transection of the firm. Sell and purchase of the company in the financial year. Main purpose of the accounting is to present a clear view of the financial transaction with 100 % accuracy for the investors and the stakeholders and its users.

Steps involved in the accounting

1. Recording financial transactions.
2. Preparing financial statements.
3. Filing tax return.
4. Making financial decisions

Main differencee between Bookkeeping and accounting

1. Bookkeeping is recording the financial transactions. While accounting is the identifying, recording, summarizing, classification and communicating financial transactions.
2. No financial statement is prepared in bookkeeping. While the financial statement is prepared in accounting.
3. Bookkeeping is not used for decision making. Accounting is used to make financial statements.
4. No need to analyze the data in the Bookkeeping. Accounting helps to analyze the financial data.
5. Accounting presents the position of the company. Bookkeeping does not show the position of the company.
6. Accounting is used by the investors and users of the company. Bookkeeping is not used by the investors and the users of the company.
7. To maintain and understand bookkeeping there is no need for high level skill. Accounting needs a high level of skills.
8. Bookkeeping is the first step of accounting. While accounting is the first step for the balance sheet.

Conclusion

Bookkeeping and accounting play a big role in the transactions sector of finance. Bookkeeping is the first step for the accounting. If the bookkeeping is done with accuracy it helps very much in the accounting. Bookkeeping is clerical work so there is no need for high level skills for the bookkeeping. And for accounting higher level skills of finance and accounting are needed.

This is all about Bookkeeping and accounting. We hope you understand the topic very well. For any help please feel free to comment on us. For more interesting topics like this please go through our website.