Difference between Bookkeeping and Accounting
Basis |
Bookkeeping |
Accounting |
---|---|---|
Definition |
Bookkeeping includes identifying and recording all financial transactions. | Accounting is the process of measuring and recording all financial transactions that happened in a financial year. |
Objective |
The objective of Bookkeeping is to prepare original books of accounts. | The objective of Accounting is to record, analyze, and interpret all the transactions. |
Scope |
It has a limited scope. | Accounting has a wider scope as compared to Bookkeeping. |
Decision Making |
Management cannot take decisions on the basis of bookkeeping because it is only concerned with the management of books. | With the help of accounting, management can take decisions as it is responsible for communicating the information. |
Analysis |
The information is only recorded in the bookkeeping and not analyzed. | In Accounting, analysis is done to obtain important insights into the business. |
Skill Required |
There is no need of having any special skills to record the transactions in Bookkeeping. | Accounting requires special skills because it is analytical in nature. |
Reflecting Position of Business |
Bookkeeping does not show the financial position of the business as it is only concerned with recording. | Accounting shows the net results of the business, including profit earned and the assets and liabilities of the business. |
Principles of Accountancy |
Accounting concepts and conventions are followed in Bookkeeping. | The methods of interpretation and reporting of transactions in accounting differ from firm to firm. |
Level of Work |
Bookkeeping is restricted to a low level of work, which is clerical in nature. | Accounting is concerned with low, medium, and even top-level management. |
Supervision |
The Book-keeper does not supervise the work of an Accountant. | An Accountant is responsible for supervising and checking all the work done by Book-keeper. |
Difference between Bookkeeping and Accounting
Bookkeeping and Accounting are two different processes in Accountancy. They are the two fundamental aspects of financial management, but they serve different purposes and involve different tasks. Bookkeeping is the process of systematically maintaining records or books of accounts of an organization. However, Accounting is the process of measuring and recording all financial transactions of a financial year.
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