Many a times, bookkeeping is mistaken for accounting. Accounting is the systematic way of identifying, keeping records, classification, analyzing and communicating financial information over a given period of time in order to realize the losses and profits of a firm whereas book keeping is a part of the process in accounting through recording of financial transactions. Book keeping provides information essential for preparation of accounts. The two processes have their similarities and differences as outlined below.
Similarities
Records
In both accounting and book keeping, records are extremely important. Book keeping requires daily noting down for simple access when it comes to preparing accounts and accounting demands the records for preparation and analyzing of financial statements.
Classification
In the daily transaction records, they are classified into different books i.e. bank book that is used to record the deposits and withdrawals made, purchase book for the records of all purchases made on credit, cash book used for the purpose of recording all cash payments such as trade payables such as trade payables and petty cash purchases and cash receipts such as trade receivables and cash sales and finally the sales book in which non-cash sales are recorded together with customer’s key details and later transferred to the customer’s account.
Differences
Tools used
Chesterfield Payroll Accounting makes use of the income statement, balance sheets And even cash flow statements because its most important tools while in book keeping journals and ledgers are utilized.
Financial statement preparation
While publication keeping does not require any preparation of financial statements, accounting is largely the preparation of these financial statements like balance sheets, profit and loss statement and cash flow statements.
Management role
The direction Isn’t involved in book keeping but they’ve a particular interest in accounting documents because it is useful in checking on the operation of an organization and making of future choices based on that information.
Decision making
Whereas information provided by publication keepers cannot be Solely utilized to make conclusions, accounting data plays a significant part in making decision making in a company.
Job role
Chesterfield Bookkeeping roles are mainly to collect, record and Classify information relating to monetary transactions while accounting requires more skilled personnel to interpret and convey the consequences for decision making.
Skills needed
Accounting is a little complicated hence it requires particular skills while on the other hand accounting doesn’t require any particular skills because of its simple nature.
Categories
Accounting is classified to cost, management and financial accounting among other categories while reserve keeping is categorized into single entry and double entry.
Lots of people tend to confuse book keeping and accounting to be the exact same thing. However, as we have seen in this paper the two processes share some common characteristics and as well have their differences that distinguish one from another.
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