If your knowledge of accounting is slim, you might be confused about the differences between bookkeeping and accounting.

Bookkeeping is a small part of accounting. It represents only the recording phase of an accounting system. Therefore, 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:

The main differences between bookkeeping and accounting are summarized in the table below.

Accounting Bookkeeping
Represents the summarizing phase Represents the recording phase
It is the basis for business language It is the basis of accounting
Individuals who practice accounting are known as accountants Individuals who practice bookkeeping are known as bookkeepers
Only an expert can practice accounting as it requires subject-specific skills and knowledge Anyone can practice bookkeeping as it does not require specific skills or knowledge
As an accountant, personal judgment is essential Since the bookkeeper’s task is to collect data, personal judgment is not essential
Financial statements are prepared from accounting records Financial statements are not prepared from bookkeeping records
Provides data for managerial decision-making Does not provide data for managerial decision-making

Frequently Asked Questions

What is bookkeeping?

Bookkeeping is the process of recording financial transactions of a business in a journal or ledger. This process involves noting down the amount of money spent or received from each transaction and posting it in an account so that the balance becomes zero.

What is accounting?

Accounting is the process of analyzing and summarizing financial transactions. Individuals who practice bookkeeping are known as bookkeepers and those who practice accounting are known as accountants. An accountant doesn’t only record the transactions but also prepares financial statements like trading and profit & loss account, balance sheet, etc.

How much will bookkeeping and accounting services cost?

Costs for bookkeeping and accounting services vary depending on the size and complexity of your business' finances. However, most services offer a variety of pricing options to meet the needs of businesses of all sizes.

What are the main differences between bookkeeping and accounting?

Bookkeeping is only a part of accounting while accounting is the complete process that includes Bookkeeping, preparation of Financial Statements, analysis of data, etc. Bookkeepers deal with daily transactions while accountants analyze the data to prepare Financial Statements.

What is the role of bookkeeping in an organization?

The process of Bookkeeping is carried out by bookkeepers who are responsible for recording all transactions. This includes recording cash receipts, cash payments, bank transactions, etc. Bookkeeping is the basis of accounting so bookkeepers are an important part of any organization.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, 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.

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