Difference Between Bookkeeping And Accounting
The main dissimilarities or difference between bookkeeping and accounting can be expressed as follows:
1. Meaning
Bookkeeping: Act of identifying, classifying and recording business transactions correctly and systematically.
Accounting: A process of recording and interpreting business transactions, communicating the financial information and reporting the results.
2. Nature
Bookkeeping: It is a routine act of bookkeeper
Accounting: It is creative and judgmental act of accounting personnel.
Bookkeeping: Only a small part of the accounting process.
3. Purpose
Bookkeeping: To maintain permanent and systematic record of business transactions.
Accounting: To reveal the financial position and to ascertain the profit or loss of the business.
4. Whole Or Part
Bookkeeping: Only a small part of the accounting process.
Accounting: It is a complete process which includes bookkeeping also.
5. Skill And Knowledge
Bookkeeping: No special knowledge and skill is required because of its mechanical nature.
Accounting: It requires complete accounting knowledge, skills and experience to maintain proper accounting system.
6. Maintain
Bookkeeping: A bookkeeper or a clerk can maintain bookkeeping system.
Accounting: A qualified accounting personnel is required to maintain accounting system in the business.
7. Preparing Financial Statements
Bookkeeping: There is no need to prepare financial statements in bookkeeping.
Accounting: Financial statements are prepared at the end of every accounting period.
8. Decision Making
Bookkeeping: It is not suitable to take business decisions.
Accounting: Financial data and information provided by accounting are important to take various business decisions.
9. Tools Required
Bookkeeping: It requires journals and ledgers to record financial transactions of the business.
Accounting: It requires various tools such as trial balance, trading account, profit and loss account, balance sheet, cash flow statement, funds flow statement etc. to obtain the financial results.
Also Read:
Also Read:
10. Branch
Bookkeeping: No branch
Accounting: Cost accounting, financial accounting and management accounting are the main branches of accounting.
11. Stage
Bookkeeping: Bookkeeping is a beginning or primary stage of accounting.
Accounting: Accounting is a secondary stage and starts after the end of bookkeeping.
Bookkeeping Vs Accounting (Comparison Chart)
I hope this post is helpful to understand the difference between bookkeeping and accounting and to make comparison between them.
Basis For Difference
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Bookkeeping
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Accounting
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Introduction
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Act of identifying, summarizing and recording monetary transactions of business
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Process of recording business transactions and reporting the financial results
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Type Of Process
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Routine process
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Judgmental process
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Objective/Purpose
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Systematic recording of business transactions
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To reveal net results (profit or loss) and financial position
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Whole Or Part
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Part of accounting
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A whole process
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Special Knowledge
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Not required
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Required
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Maintained By
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A Bookkeeper
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Qualified accounting personnel
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Preparation Of Financial Statements
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No
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Yes
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Helpful In Decision Making ?
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No
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Yes
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Tools
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Journal and ledger
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Trial balance, trading account, profit and loss account, balance sheet etc.
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Branch
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No branch
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Cost accounting, financial accounting and management accounting
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Stage
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First stage
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Secondary stage
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I hope this post is helpful to understand the difference between bookkeeping and accounting and to make comparison between them.
