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Difference Between Bookkeeping and Accounting

What is BookKeeping

BookKeeping means a process in which recording, storing and retrieving a company's financial transaction on the regular basis. The transaction comprises of an individual or a company's sales, purchases, receipts, etc. BookKeeping is managed by BookKeepers.

In a Business, BookKeeping plays an important role because it gives all financial data a systematic order. It is also important for all the financial sources such as government, financial institutions and investors.

Bookkeeping methods are of two types; which are Single-Entry system of BookKeeping and Double-Entry system of Book Keeping.

Typical BookKeeping Duties

There are various duties of Bookkeeping:

  • Processing a payroll system and maintain it.
  • Preparing initial financial statement
  • Processing invoices.
  • Managing accounts payable and accounts receivable.
  • Preparing and filing VAT returns.
  • Processing receipts, payments and other financial transactions.
  • Filling and document management
  • Providing basic tax advice
  • Posting Journal entries

Process of BookKeeping

The process of BookKeeping involves the following steps:

  1. Identifying and recording financial transactions.
  2. Posting all debits and credits of a venue accurately.
  3. Creating invoices.
  4. Preparing and maintaining general ledger accounts.
  5. Preparing and managing the trial balance.

What is Accounting

Accounting means a process of recording, analysis, interpretation, and summarization of a company's financial data. Accounting verifies the record of BookKeeping and makes its financial report.

With the help of Accounting, investors and stakeholders can determine the financial position of a company. Accounting helps the company in making short- and long-term decisions and take a company's credibility to the market.

The main purpose of accounting is to offer its users a clear and true view of the financial statements that comprise government, employees, creditors and investors. Accounting is also called the language of business.

There are various branches of Accounting:

  • Cost Accounting
  • Management Accounting
  • Financial Accounting
  • Social Responsibility Accounting
  • Human Response Accounting

Typical Accounting Duties

There are various Accounting duties:

  • Preparing to adjust entries
  • Auditing
  • Financial forecasting
  • Analysis of business performance
  • Financial management advice
  • Tax strategy and tax planning
  • Prepare business plans and cash flow forecasts
  • Preparing financial statements and reports
  • Completing income tax returns
  • Organizing budgets

Process of Accounting

The process of Accounting involves the following points:

  • Recording adjusting entries
  • Formulating and analyzing financial statements
  • Prepare ledger account and trial balance
  • Assessing operational cost
  • Completing tax returns
  • Weighing the impact of decisions pertaining to finances.

Difference Between Bookkeeping and Financial Accounting

Basis for Comparison BookKeeping Accounting
Meaning BookKeeping means a process in which recording, storing and retrieving a company's financial transaction on the regular basis. Accounting means a process of recording, analysis, interpretation, and summarization of a company's financial data.
Purpose The purpose of bookkeeping is to maintain the records of each financial transactions fair and orderly. The purpose of accounting is to assess the financial situation and inform the information to the concerned authorities.
Skills Required There are no special skill sets required for BookKeeping. Because of the analytical and complex nature of accounting, it requires some special skills.
Financial Statement The financial statement is not a part of the Bookkeeping. The financial statements are prepared through the accounting process.
Basis of Accounting Bookkeeping is the basis of accounting. Accounting is the language of business.
Analysis The analysis is not needed for Bookkeeping. Accounting analyses the data and provides company insights.
Determining Financial Position With the help of the Bookkeeping, we cannot determine the business' financial position. With the help of Accounting, we can determine the business' financial position.
Persons Involved Bookkeeper is the person involved in the bookkeeping. Accountant is the person involved in the accounting.

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