Book-Keeping and Accounting: Bookkeeping is the process of documenting financial transactions and is a component of the accounting process in company. Purchases, sales, receipts, and payments by an individual or an organization/corporation are all examples of transactions. The single-entry and double-entry bookkeeping systems are two of the most common types of bookkeeping. While this may seem to be “genuine” accounting, any method of documenting financial transactions is a bookkeeping method.
A bookkeeper (or book-keeper) is someone who keeps track of a company’s day-to-day financial transactions. They generally write the daybooks (which include records of sales, purchases, receipts, and payments) and enter each financial transaction, whether cash or credit, into the appropriate daybook—that is, the petty cash book, suppliers ledger, customer ledger, and so on—as well as the general ledger. The information recorded by the bookkeeper may then be used by an accountant to compile financial reports for Book-Keeping and Accounting
Bookkeeping is primarily concerned with the record-keeping parts of financial accounting, and it entails the preparation of source documents for all corporate transactions, activities, and other occurrences. The bookkeeper takes the books to the trial balance stage, and an accountant may use the trial balance and ledgers created by the bookkeeper to construct the income statement and balance sheet. Book-Keeping and Accounting is very important for Company, Organization, MNCs, etc.
Book-Keeping and Accounting
Bookkeeping is the process of properly recording financial transactions connected to an entity’s commercial operations. Bookkeeping is the process of permanently documenting financial transactions in an entity’s books of accounts in such a way that their financial impact on the entity’s company can be observed. The phrases bookkeeping and accounting are not interchangeable.
Book-Keeping and Accounting are not the same thing. Accounting is incomplete without bookkeeping. Accounting encompasses more than just bookkeeping. Accounting is the creation of accounting systems that bookkeepers use to prepare financial statements, audits, cost studies, and income-tax statements, among other things.
It also makes it easier for internal and external users to analyse accounting data in order to make business choices. It need the expertise and knowledge of an accountant. There is a distinction between the phrases bookkeeping and accounting. Let us examine what bookkeeping and accounting are, as well as their methods and differences. We must adhere to fundamental accounting ideas and procedures while doing bookkeeping.
Bookkeeping is a clerical job. Junior workers of the company are frequently in charge of bookkeeping. In today’s world, most businesses utilise computers to keep track of their finances rather than keeping track of them manually. The book-keeping system of an entity determines its accounting.
Book-Keeping and Accounting is built on the foundation of book-keeping. It’s because it’s in charge of properly tracking financial transactions. Accounting, on the other hand, is concerned with the categorization, summarization, and reporting of financial transactions. It entails the creation of source documentation for all of the entity’s financial activities.
Process of Bookkeeping
- Identifying financial transactions
- Recording of financial transactions
- Preparation of ledger accounts
- Preparation of trial balance
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Bookkeeping |
Accounting |
| Book-keeping consists of recording financial transactions in a logical fashion | Accounting concerns itself with summarizing of such recorded financial transactions |
| It is the basis of the process of accounting | Accounting is the basis for the Business Language |
| Financial statements are not a part of the bookkeeping | Preparing financial statements is the ultimate aim of accounting |
| Managers do not take decisions on the basis of bookkeeping records | Accounting records are used to assist managers in making decisions |
| Bookkeeping does not have any branches | Accounting has branches such as Cost Accounting, Management Accounting, etc |
| It is done by bookkeepers, who do not require any special skill or knowledge | Accountants, on the other hand, require special accounting knowledge and skills |