Difference Between Bookkeeping and Accounting
Those people, who have little knowledge about accounting, are often confused in understanding the difference between Bookkeeping and Accounting. Bookkeeping is a small part of Accounting. Bookkeeping represents the recording phase of an accounting system. So we can say that the process of Accounting begins where the process of Bookkeeping ends. Accounting not only includes maintaining accounting records but also the preparation of the following statements.
(1) Trading and Profit & Loss Account
(2) Balance Sheet
The main differences between bookkeeping and accounting are as under.
|It represents Summarizing phase.||It represents the recording phase.|
|It is the basis for business language.||It is the basis of accounting.|
|Persons who practice accounting are known as accountants.||Persons who practice bookkeeping are known as bookkeepers.|
|Only an expert can practice accounting as it requires several skills and knowledge.||Anyone can practice bookkeeping as it does not require any skill or knowledge.|
|As an accountant personal judgment is essential.||As the work of Bookkeeper is to collect data so his personal judgment is not essential.|
|Financial statements are prepared from the accounting record.||Financial statements are not prepared from Bookkeeping records.|
|It provides data for managerial decision making.||It does not provide data for managerial decision making.|
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.