Content: Bookkeeping Vs Accounting

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart
Basis for
Comparison
Meaning
What is it?
Decision Making

Bookkeeping

Accounting

Bookkeeping is an activity of
Accounting is an orderly recording and
recording the financial
reporting of the financial affairs of an
transactions of the company in a
organization for a particular period.
systematic manner.
It is the subset of accounting.
It is regarded as the language of business.
On the basis of bookkeeping
Decisions can be taken on the basis of
records, decisions cannot be taken. accounting records.

Preparation of
Financial
Statements

Not done in the bookkeeping

process

Tools

Journal and Ledgers

Methods / Subfields

Single Entry System of

Bookkeeping and Double Entry
System of Bookkeeping

Part of Accounting Process

Balance Sheet, Profit & Loss Account
and Cash Flow Statement
Financial Accounting, Cost Accounting,
Management Accounting, Human
Resource Accounting, Social
Responsibility Accounting.

Bookkeeping does not reflect the

Determination of
Accounting clearly shows the financial
financial position of an
Financial Position
position of the entity.
organization.

Definition of Bookkeeping

The process of complete and systematic record keeping of the monetary transactions of an
organization by the bookkeeper is known as bookkeeping. It is the activity of keeping full
documentation of every single financial transaction of the entity to form a base for the
accounting process. The purpose of bookkeeping is to disclose the correct picture of income and
expenditure at the end of the accounting period.
The task of bookkeeping is performed by the bookkeeper who is responsible for recording the
day-to-day business transactions like incoming and outgoing of cash, goods sold or purchased on
credit, expenses incurred, etc. in an orderly manner. The bookkeeper captures the transactions in
the day books like purchase, sales, purchase return, sales return, cash book, journal, etc. and
posts them in the concerned ledger, after that trial balance is prepared. There are two methods of
Bookkeeping:

Single Entry system of Bookkeeping

Double Entry system of Bookkeeping

Definition of Accounting
Accounting is simply a business language which provides information about the financial status
of the organization. It is a complete procedure which starts from the recording of transactions
and ends on reporting of the financial statements at the end of the financial year.
In accounting the monetary transactions of an organization are identified and systematically
recorded, then they are grouped, i.e. the transactions of similar nature are classified into a
common group and then it is summarized in a way which can be presented to the users of the
financial statement. After this thorough analysis of financial statements are done which will help
in interpreting the conclusions and finally communicating the results of the financial statements
to the interested parties.
The purpose of accounting is to provide true and fair view of the financial statements to its users,
i.e. investors, employees, creditors, suppliers, managers, government and the general public in
such a manner which is easily understandable to them for a particular financial year. The
financial statement prepared with the help of accounting states about the wealth, profit and
financial position of the entity. The branches of accounting are:

Financial Accounting

Cost Accounting

Management Accounting

Human Resource Accounting

Social Responsibility Accounting

Key Differences Between Bookkeeping and Accounting

The following are the major differences between bookkeeping and accounting:
1. Bookkeeping is keeping proper records of the financial transactions of an entity.
Accounting is recording, measuring, grouping, summarizing, evaluating and reporting of
transactions of the entity which are in monetary terms.
2. The task of Bookkeeping is performed by a bookkeeper whereas the accountant performs
the task of Accounting.
3. Financial Statement forms a part of the accounting process but not the bookkeeping
process.
4. Accounting records are taken as a base for taking managerial decision unlike
bookkeeping records, in which decision making is difficult.
5. Bookkeeping is the first step to Accounting.
6. Bookkeeping does not disclose the correct financial position however for purpose
accounting helps the users in showing the true and fair view of the financial status and
profitability of an organization.

Conclusion
Bookkeeping works as a platform to Accounting procedure as bookkeeping is the initial stage or
inception of accounting. Hence, Bookkeeping is an inseparable part of Accounting. Bookkeeping
acts as a base for the Accounting and so if the bookkeeping of records is done properly, then it is
supposed that accounting will also be perfect and vice versa. The task of Bookkeeping is a
clerical one. Therefore, a little knowledge of commerce is sufficient for it while the task of
accounting is an analytical one so thorough knowledge in this field is required.
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