What is Bookkeeping?
Bookkeeping can be defined as the proper and systematic maintenance of the books of accounts. It is the science and art of identifying and recording accounting transactions in a systematic way in the proper books of accounts. It is concerned with the proper maintenance of the books, i.e., Journal, Ledger, Cash Book, and other subsidiary books.
It must be noted that bookkeeping is not concerned with disclosing or interpreting the results of the business, unlike accounting.
Bookkeeping consists of the following steps:
- Identifying a financial transaction
- Recording or posting debit or credit
- Producing invoices
- Preparing financial statement
- Maintaining and balancing subsidiaries and other accounts
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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