Difference between Bookkeeping and Accounting

What is bookkeeping and accounting?

Bookkeeping:

Bookkeeping is an activity which means recording of financial data relating to business operation in significant and orderly manner.It covers the procedural aspects of accounting work and embraces record keeping function.

Further, bookkeeping procedures are governed by the end product i.e. the financial statements. The financial statement means Profit and loss account, Balance sheet and cash flow statements including schedules and notes forming part of accounts.The bookkeeping requires suitable classification of events and transactions.

Bookkeeper is responsible for keeping all the records of business.

In addition, the idea behind maintaining book-keeping records is to show correct position regarding each head of income and expenditure. For instance business may purchase goods on credit as well as in cash. When the goods are bought on credit record must be kept of the person to whom money is owed. The proprietor of the business must know from time to time , what amount is due on credit purchase and to whom.

In addition, if proper record is not maintained , it is not possible to get the details of transactions in regard to the income and expenses. Therefore, the proper maintenance of books of account is essential for any business.

In brief, it is a systematic recording of financial transactions and information relating to business of a company regularly. And bookkeeper are individual are individuals or entities who maintain books of accounts of a company.

What are the objectives of book-keeping?

Following are the objectives of accounting:

1. Complete recording of transactions: It is concerned with complete and permanent record of all transactions in a systematic and logical manner to show its financial effect on the business.

2. Ascertainment of financial effect on the business: It is concerned with the combined effect of all the transactions made during the accounting period upon the financial position of the business as a whole.

Accounting:

Accounting means system of classifying, summarizing and recording of financial and business transactions. Further, it is communication of financial and non-financial information.

In brief, accounting is an art of record keeping. The process of accounting begins with by first identifying the events and transactions which are of financial nature. And then recorded in books of accounts. This recording is done in journal and subsidiary books also known as Primary Books.

The primary function of accounting is to provide quantitative information , primarily of financial nature.

Refer:https://taxandfinanceguide.com/accounting/

Difference between Bookkeeping and Accounting

Some people mistake book-keeping and accounting to be synonyms terms . But infect they are different from each other. Accounting is a broader concept.

Bookkeeping is the recording phase while accounting is concerned with the summarising phase of an accounting system.

BOOK-KEEPING -> ACCOUTING -> ACCOUTANCY

Further, bookkeeping is separate process from accounting. Accounts are prepared from data provided by book-keeping. Further, bookkeeping is primary and basic function in process of accounting and deals with recording and maintenance books of accounts only.

Moreover, bookkeeping involves proper recording of all financial transactions .Whereas , accounting involves systematically organising ,summarising , classification and reporting of financial transactions.

In brief,bookkeeping provides necessary data for accounting . And accounting starts where bookkeeping ends.

Let us discuss difference between book-keeping and accounting in table form.

Book-keeping	Accounting
It is a process concerned with recording of transactions.	It is process concerned with summarising of a recorded transactions.
Book-keeping constitutes as a base for accounting.	It is considered as a language of the business.
Financial statement do not form part of this process.	Financial statements are prepared in this process on the basis of book-keeping records.
Managerial decision cannot be taken with the help of these records.	Management takes decisions on the basis of these records.
There is no sub field of book-keeping.	It has several sub-fields like financial accounting ,management accounting.
Besides, Financial position of the business cannot be ascertained through book-keeping records.	Financial position of the business is ascertained on the basis of accounting reports.

Conclusion:

Bookkeeping is primary and basic function in process of accounting and deals with recording and maintenance books of accounts only. Further, bookkeeping involves proper recording of all financial transactions.

Whereas, accounting involves systematically organising ,summarising , classification and reporting of financial transactions. And financial position of the business is ascertained on the basis of accounting reports.