The difference between accounting and bookkeeping can be hard to discern. Although bookkeepers and accountants share common goals, they support your business at different stages.
Putting it simply, bookkeeping is more transactional and administrative, concerned with recording financial transactions, while accounting is more subjective, providing insights into your business’s financial health.
The purpose of this guide is to explain the functional differences between accounting and bookkeeping, as well as the roles of bookkeepers and accountants.
Differences Between Accounting and Bookkeeping
The following are the differences b/w accounting and bookkeeping:
Bookkeeping | Accounting | |
Definition | In bookkeeping, financial transactions are identified, measured, and recorded | Accounting involves summarizing, interpreting, and communicating financial transactions classified in ledger accounts |
Decision Making | Making decisions based on bookkeeping data is not sufficient | Accounting data can be used by management to make important decisions |
Objective | Keeping proper and systematic records of all financial transactions is the objective of bookkeeping | In accounting, the objective is to assess the financial situation and communicate that information to the appropriate parties |
Skills Required | There are no special skills required for bookkeeping | Due to its analytical and complex nature, accounting requires special skills |
Analysis | The bookkeeping does not require any analysis | Accounting analyzes data and creates business insights |