Bookkeeping vs. Accounting

Bookkeeping and Accounting together refer to the process of recording, classifying, summarizing, and analysing financial transactions of a business to find out its profit or loss and financial position. Although they are related, they are not the same. 

• Bookkeeping records daily financial transactions. 

• Accounting uses these records to prepare financial statements and make decisions. 

• Both work together to ensure the smooth running of a business. 

Bookkeeping 

Bookkeeping can be defined as the proper and systematic maintenance of the books of accounts. It is the science and art of identifying and recording accounting transactions in a systematic way. It is concerned with the proper maintenance of the books, i.e., Journal, Ledger, Cash Book, and other subsidiary books. bookkeeping does not involve analysing or interpreting the results of a business; it focuses only on accurate recording. 

Accounting 

Accounting is the process of measuring and recording, summarizing, analysing all the financial transactions of business during the financial year. It helps in getting a clear picture of the financial position of the business by showing value of assets and liabilities .  

Accounting is guided by many different rules, principles and standards, which are needed to be followed to obtain the required information for the decision-making process. 

Difference between Bookkeeping and Accounting- 

Basis	Bookkeeping	Accounting
Definition	Identifying and recording all financial transactions	Measuring, summarizing, analysing, and interpreting financial transactions
Objective	To record all transactions	To record, analyse, and interpret transactions
Scope	Limited scope	Wider scope compared to bookkeeping
Decision Making	Does not help in decision making	Helps in decision making
Analysis	Only records information; no analysis	Analyses data to gain business insights
Skill Required	Knowledge of recording transactions accurately	Knowledge of accounting rules, principles, and standards
Financial Position	Does not show financial position	Shows profit, assets, and liabilities
Complexity	Simple process	More complex process
Level of Work	Clerical, low-level work	Involves all management levels
Supervision	Does not supervise accountant	Accountant supervises bookkeeper