Difference Between Bookkeeping and Accounting

What is BookKeeping

BookKeeping means a process in which recording, storing and retrieving a company's financial transaction on the regular basis. The transaction comprises of an individual or a company's sales, purchases, receipts, etc. BookKeeping is managed by BookKeepers.

In a Business, BookKeeping plays an important role because it gives all financial data a systematic order. It is also important for all the financial sources such as government, financial institutions and investors.

Bookkeeping methods are of two types; which are Single-Entry system of BookKeeping and Double-Entry system of Book Keeping.

Typical BookKeeping Duties

There are various duties of Bookkeeping:

• Processing a payroll system and maintain it.
• Preparing initial financial statement
• Processing invoices.
• Managing accounts payable and accounts receivable.
• Preparing and filing VAT returns.
• Processing receipts, payments and other financial transactions.
• Filling and document management
• Providing basic tax advice
• Posting Journal entries

Process of BookKeeping

The process of BookKeeping involves the following steps:

1. Identifying and recording financial transactions.
2. Posting all debits and credits of a venue accurately.
3. Creating invoices.
4. Preparing and maintaining general ledger accounts.
5. Preparing and managing the trial balance.

What is Accounting

Accounting means a process of recording, analysis, interpretation, and summarization of a company's financial data. Accounting verifies the record of BookKeeping and makes its financial report.

With the help of Accounting, investors and stakeholders can determine the financial position of a company. Accounting helps the company in making short- and long-term decisions and take a company's credibility to the market.

The main purpose of accounting is to offer its users a clear and true view of the financial statements that comprise government, employees, creditors and investors. Accounting is also called the language of business.

There are various branches of Accounting:

• Cost Accounting
• Management Accounting
• Financial Accounting
• Social Responsibility Accounting
• Human Response Accounting

Typical Accounting Duties

There are various Accounting duties:

• Preparing to adjust entries
• Auditing
• Financial forecasting
• Analysis of business performance
• Financial management advice
• Tax strategy and tax planning
• Prepare business plans and cash flow forecasts
• Preparing financial statements and reports
• Completing income tax returns
• Organizing budgets

Process of Accounting

The process of Accounting involves the following points:

• Recording adjusting entries
• Formulating and analyzing financial statements
• Prepare ledger account and trial balance
• Assessing operational cost
• Completing tax returns
• Weighing the impact of decisions pertaining to finances.

Difference Between Bookkeeping and Financial Accounting