Difference Between Book-keeping and Accounting

Difference between bookkeeping and Accounting

The terms "bookkeeping" and "accounting" do not have the same meaning. Accounting is much wider than bookkeeping. The difference between bookkeeping and accounting arises due to the following reasons:

Bookkeeping

1.    Bookkeeping involves the recording of business transactions in a prescribed manner

2.    No professional knowledge and skill is required for a bookkeeper.

3.    Bookkeeping is an initial stage of accounting therefore, the scope of bookkeeping is limited. It provides the primary information about the business.

4.    Much of the work of a bookkeeper is clerical in nature and the job is mainly preliminary.

5.    It provides the primary information to the business.

6.    Financial statements are not prepared from bookkeeping records.

7.    It does not give the complete picture of the financial condition of the business unit.

8.    It does not provide any information for taking managerial decisions

9.    It has no branches

Accounting

1.    Accounting in addition to recording of business transactions, also includes other matter such as making adjustments, preparation of income statement, balance sheet and interpreting results thereof.

2.    Professional knowledge and skill is prerequisite for an accountant.

3.    The scope of accounting is wider.

4.    The work of accountant is technical in nature. Modern accounting serves as eyes and ears to the management. It has become the foundation on which the whole structure of commerce rests and without which no business can be run at all.

5.    It provides information about the final results of the business

6.    Financial statements are prepared from accounting records.

7.    It gives the complete picture of financial condition of the business unit.

8.    It provides information for taking managerial decisions.

9.    It has several branches, e.g., financial accounting, managerial accounting, cost accounting etc.