This blog will present the difference between Bookkeeping and Accounting from various aspects to clarify the understanding that how “Bookkeeping is different from Accounting”, which is actually not, because Bookkeeping is part of Accounting.
Scope of Accounting and Bookkeeping
Accounting is broader in terms of including not only collecting and recording the financial information but also analyzing and summarizing the information and then finally communicating with the stakeholders to provide them the information of their interest. Therefore, accounting does more than bookkeeping, i.e. only recording of financial information.
Skills comparison
Accounting requires greater skills than bookkeeping. Because learning through the skills of recording does not require greater number of years of training and education but financial analysis and learning through various critical analysis may require more knowledge and skills as well as training of many years. Further more, communicating with the stakeholders with the ready made information also need even more training.
Job Comparison
Accounting is a periodic job, i.e. financial reporting as required or calculating profit or loss as well as measuring the financial progress of the business. Bookkeeping is a daily or a routine work where recording of transactions and their posting to the various ledger accounts take place.
Is accounting dependent on bookkeeping?
The answer is yes. Because the job of an accountant is based on bookkeeper’s recording. If a bookkeeper does not record the information accurately then accounting job will not be in the right direction. All the stakeholders will get incorrect information and the accuracy of accounting record could be challenged then.
Conclusion
In conclusion, bookkeeping is part of accounting, and provide input for further Accounting job till it communicates the information to the stakeholders.