ACCOUNTING VS BOOK KEEPING
What is Accounting?
Accounting refers to recording financial transactions which includes summarizing, collecting, reporting, storing and presenting the outcome in various reports and analysis. Accounting focuses on presenting the financial information which includes balance sheet, income statement, etc. Accounting focuses on providing a company's management with the information needed to keep the business financially healthy. Although some of the information comes from recorded transactions, many of the analyses and reports include estimated and projected amounts based on various assumptions.
It helps a business in the short and long term decision making. The purpose of accounting is to have a clear picture financial statements to its investors, creditors, employees and government.
Process of Accounting
What is Book Keeping?
Book Keeping is a process of recording and organizing all the business transactions that have occured in the course of business.Book Keeping is an integral part of accounting and focuses on recording day to day financial transcation of the business.
All the financial transactions such as sales earned revenue, payment of taxes, earned interest, payroll and other operational expenses, loans investments etc. are recorded in books of accounts.
Process of Bookkeeping
Let us know the difference between book keeping and accounting below:
|1.||Definition||Bookkeeping deals with identifying and recording financial transactions only||Accounting refers to the process of summarising, interpreting and communicating the financial data of an organisation.|
|2.||Decision making||Data provided by bookkeeping is not sufficient for decision making||Management can take important decisions based on the data obtained from accounting|
|3.||Objective||The objective of bookkeeping is to keep proper and systematic records of financial transactions.||The objective of accounting is to ascertain the financial position and further communicate the information to the relevant parties.|
|4.||Preparation of Financial Statement||Not applicable in case of book keeping||Financial statements are a part of the accounting process|
|5.||Persons Involved||The person concerned with bookkeeping is known as a bookkeeper||The person concerned with accounting is known as an accountant|
|6.||Analysis||No analysis is required in the bookkeeping||Accounting analyses the data and creates insights for the business|
|7.||Determining Financial Position||Bookkeeping does not show the financial position of a business||Accounting helps in showing a clear picture of the financial position of a business|
|8.||Level of Learning||No high-level learning required||High-level learning required for understanding and analysing accounting concepts|
Roles and Responsibilities of a Bookkeeper
Roles and Responsibilities of an Accountant
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