Difference Between Accounting And Bookkeeping

Difference Between Accounting And Bookkeeping

Accounting and Bookkeeping are two crucial processes of the accounting field that is necessary for every business. To put it into the simplest terms, bookkeeping is used to record the financial transactions whereas accounting is for interpreting, analysing, reporting and other functions like summarising the data.

So what’s the difference between accounting and bookkeeping?

A general conception is that accounting and bookkeeping are similar. However, that’s profoundly mistaken. There are some striking differences between each other.

Here’s the difference you need to know about the two most important process.

Accounting	Bookkeeping
Accounting is the procedure of summarising, analysing, classifying and interpreting the financial transactions.	Bookkeeping is chiefly related to identify, examine, and lastly record the financial transactions.
Where the bookkeeping ends is where the accounting begins.	While bookkeeping is beginning, stage and acts as the base of accounting.
On the basis of the accounting the owners can take decisions related to the business.	The management team is not permitted to take the decisions on the basis of the bookkeeping.
The objective of the accounting is to discover or perhaps establish the financial position of the business and even further communicate anything related to it with the other business partners/parties.	Bookkeeping’s primary objective is to maintain proper and systematic records of the monetary transactions.
Accounting requires special skills like analytical and of course, understanding the complexity of the problem	Bookkeeping does not need any set of skills.
Accounting uses bookkeeping to analyse and interpret the data and later on it compiles into the financial reports.	Bookkeeping does not analyse the data.
The accounting department does the preparation of the company’s budget and plans the loan proposals for the company.	There are two types of bookkeeping. 1. Single Entry 2. Double Entry
Accountants have sufficient knowledge and education from the certified universities.	Bookkeepers are needed to be accurate in their work and knowledgeable on the finance related topics. They consistently need to keep themselves updated about the market.

Bookkeeping and Accounting have been associated with the business for a long time. Over the course, we have seen changes in both the fields. However, it’s important to know the difference. The blog as mentioned earlier sums up about the difference of accounting and bookkeeping.

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