Table of Contents
What is Bookkeeping?
Bookkeeping is an essential process in the field of accounting. The term essentially refers to the process of keeping a record of your business transactions and updating it after fixed intervals of time. By keeping up-to-date records of all transactions, it is easier to generate a comprehensive and reliable financial report.
The frequency of bookkeeping can vary from company to company. Usually, bookkeeping is done on a regular basis to ensure the latest information is added. As for the methods of bookkeeping, complex and simple techniques are used by large and small businesses, respectively.
There are some ways to do bookkeeping. For example, cash registers are used to record and monitor the stream of cash in a company. Financial journals contain the details of each transaction made by or to the company. A leader is another record-keeping register that is used by auditors to regulate transactions at the end of every fiscal year.
Bookkeeping is crucial in the transparent and fair regulation of a company’s finance department. Without bookkeeping, there is no way to track what the company took and what it gave. It not only helps in regulating finance but also assists in policymaking as a guiding thing for future plans.
What is Accounting?
According is a broader term that refers to the process of managing the financial transaction of a business. It implies the provision of detailed and expert analysis of the finance and reporting to concerned departments. It provides a key role in the success of a business.
Accountants are certified professionals that are responsible for keeping a record of every single transaction within a company. The accountant has to work in accordance with policies devised by auditors and other regulatory bodies. This is why his importance is pivotal.
The importance of accounting lies in the rule that the managerial team can make decisions, keeping in view the reports provided by an accountant. An accountant delivers detailed reports on the transactions within a given time to the management.
Accounting is not mere record keeping. Rather, it requires a more complex skill set and expertise because it outreaches other record-keeping techniques in scope. An accountant not only analyses but also proposes financial plans to optimize the company’s budget.
Difference Between Bookkeeping and Accounting
- Bookkeeping is limited to record-keeping and adding entries in the finance registers of a business., whereas accounting demands the ability to interpret and analyze transactions and make preparations for further plans.
- Bookkeeping can be done by amateur persons in the field as well, whereas accounting requires a higher level of education and greater expertise.
- Bookkeeping is mainly about the storage of information, whereas accounting implies the processing of complex information.
- Bookkeeping does not influence managerial decisions., whereas accounting helps the management in making beneficial decisions.
- Bookkeeping is done under the supervision of an accountant, whereas accounting is an independent process that has many subprocesses.
Comparison Table Between Bookkeeping and Accounting
|Parameters of Comparison||Bookkeeping||Accounting|
|Scope||Bookkeeping is limited in its scope||Accounting has a broader scope and multiple implications|
|Required Expertise||Bookkeeping is not complex and therefore requires no greater expertise||Accounting can be done only by an expert who is mostly a certified professional|
|Effect on Management||Bookkeeping has no impact on management||Accounting directly impacts the management|
|Certification||Certification is not required||Certification is mandatory|
|Supervision||Bookkeeping is mostly done under the supervision of an accountant||An accountant is answerable only to the regulatory body of the business|