Difference between Bookkeeping and Accounting

Difference between Bookkeeping and AccountingThe main difference between bookkeeping and accounting is; bookkeeping is the primary stage of the whole accounting process and accounting is the second or final stage of the whole accounting process.

Many people possess erroneous concepts regarding Book-keeping and Accounting.

They are neither synonymous nor two different subjects. Bookkeeping and Accounting play separate roles only in ascertaining the final results of financial transactions.

These may be termed as two steps or stages of the same subject.

Book-keeping is a primary or practical aspect and Accounting is a final or theoretical aspect of accounting. Accounting starts from where bookkeeping ends.

In other words, it can be said that bookkeeping is the basis of accounting and accounting is the structure based on bookkeeping.

Any basic difference between bookkeeping and accounting is not marked. The difference which is marked by Bookkeeping and Accounting is very narrow.

Even in practice, it is difficult to draw a clear demarcation between the activities of bookkeeping and accounting.

Even then the following distinctions are marked between bookkeeping and accounting;



The art of recording of all financial transactions supported by valid documents in a particular method is called Bookkeeping.Accounting is the task of preparing financial statements with the help of ledger balances and analyzing and interpreting the financial statements and also communicating the information to the users.

Bookkeeping is the primary stage of the whole accounting process.

In this stage, journalizing, recording and balancing are made.

Accounting is the second or final stage of the whole accounting process.

In this stage financial statements are prepared with a view to finding out financial results and exhibiting financial position and communicating the information to the management and other interested parties after necessary analysis and interpretation.

Person or persons concerned with bookkeeping are called bookkeeper or bookkeepers.The person or persons concerned with the final stage of accounting are called accountant or accountants.

The task of bookkeeping is to record the transactions.

So, in this aspect theoretical knowledge is more important.

The task of an accountant is to prepare, present and communicate information.

So, in this aspect knowledge of the application is more important.

Employees who perform bookkeeping tasks are considered as lower category employees in the organogram of the organization.

Accountants possess the status of high officials.

That is why in some cases the accountants enjoy the status of financial advisers or directors.

All primary activities – identification, recording arid posting of transactions are included in bookkeeping.Preparation of trial balance with the help of ledger account balances to prove the arithmetical accuracy of the ledger accounts and preparation of financial statements taking into consideration necessary adjustments and interpretation and analysis are the functions of Accounting.
A bookkeeper might not be highly qualified as he is not supposed to know other relevant disciplines.An accountant is to have professional discretionary power and the knowledge of various laws apart from the knowledge of Accounting.

It may be mentioned that the above-mentioned differences between Bookkeeping and Accounting are theoretical.

But in practice drawing demarcation between these two are not feasible because in most organizations the same persons perform both types of tasks.

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