Accounting vs Bookkeeping are the most crucial aspects of any business organization. They keep the track of financial recordings and transactions. It also helps in preparing the financial statements and reports at the end of the year. Although accounting vs bookkeeping sound quite similar. But in actual they are completely two different topics having their own importance. There is a very thin that makes a huge difference between accounting vs bookkeeping. Bookkeeping refers to maintaining a report of all financial transactions. While accounting vs bookkeeping is the process of analyzing, interpreting, and evaluating financial data. It also helps in making decisions for the benefit of the organization. If you want get help for your Bookkeeping Assignment Help, Our Stat Analytica experts will help you.
In a nutshell, bookkeeping is a branch of accounting that records financial transactions. While accounting aims at keeping a regular check on the finance. And the structure of an organization. Both the concepts are different with their own set of advantages and understanding. The difference between Accounting vs Bookkeeping is a hot topic for discussion. All businesses need to understand the key differences between the two.
Today, we will discuss some of the key differences between Accounting vs Bookkeeping. So, let’s start the topic with a brief definition of bookkeeping and accounting.
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Bookkeeping is the activity of recording financial transactions taking place within an organization. It keeps an eye on all the financial activities and transactions. It includes payment of taxes, loans, total income, pay bills, expenses, investments. It also manages a list of accounts that requires regular updating. It contains monetary transactions that ensure the proper working of a business organization. Some of the crucial features of bookkeeping are:
- Recording and interpreting financial transactions of a business.
- Producing invoices, payrolls, bills, receipts, etc
- Preparing and maintaining proper a balance between ledger, subsidiaries, and historical accounts
- Generating and posting debits and credits
- Providing a detailed list of financial statements at the end of the year.
Accounting is a high-level systematic and process than bookkeeping. It records, analyzes, and interprets information about the financial performance of the business. It combines the financial data provided by the bookkeeper. and produces financial models for the benefit of the business. It also provides a report about all the transactions over a specific period of time. It helps in determining the company’s financial position, expenditure, and cash flow. Accounting is a subjective and more superior process to bookkeeping. It interprets financial information to make it simple for the stakeholders to understand. People often call accounting as “language of business”. It helps companies to track smooth and accurate records of finances. It also takes care of its users such as clients, investors, creditors, and employees. Some basic features of accounting include:
- Helps in making important decisions for an organization.
- Verifies and Analyzes businesses performance.
- Prepares financial statement lists such as tax returns, income statements, and balance sheets.
- Deciding budget for an organization
- Determines operation costs within a business organization
- Helps business owners to understand the effects of financial decisions.
Main differences between Bookkeeping Vs Accounting
- The main work of bookkeeping is to generate information for accounting. While accounting processes that information to generate financial reports and statements.
- The results of bookkeeping are never enough to make a decision for a business. But, all the decisions taken by the management rely on the information of accounting. It is one of the main differences between Accounting vs bookkeeping.
- You dont need any special skills for bookkeeping. While accounting requires expert skills due to its scientific and complex nature.
- We call a bookkeeping expert a bookkeeper. While the person responsible for accounting is an Accountant.
- Bookkeeping is not responsible for the financial position of a business. But, accounting gives us a clear picture of the financial position of an organization
- Bookkeeping is a single segment of the accounting process. While accounting is a mixture of all the segments and affects the working of an organization.
- Bookkeeping is a subtype of accounting. While accounting is a broader term that deals with high aspects of the business. In business terms, we call accounting “The Language of Business”
- Bookkeeping consists of two main aspects single-entry and double-entry systems. But, accounting comes with several types like Financial accounting, cost accounting, Management accounting
- Bookkeeping consists of very less few journals and ledgers. But. accounting offers a range of tools and options like balance sheets, money flow, and income.
In simpler words, we can say Bookkeeping vs Accounting is an integral part. It provides a platform for all the operations that are later executed by accounting. But, both of them have their own importance and both have a vital role to play. They help business organizations to reach newer heights of success.
These were some of the crucial and key differences between Accounting vs Bookkeeping. I hope this blog proves beneficial for you. It clears you all doubts about different concepts of Accounting vs Bookkeeping.
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