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.
Difference Between Bookkeeping and Accounting FAQs
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.
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.
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.
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.
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 Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, 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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