Difference between Bookkeeping and Accounting

There is certainly a difference between bookkeeping and accounting as the bookkeeping is the subset of accounting. Bookkeeping refers to recording all the transactions that are made within a business. The transactions that are recorded by bookkeeping are issued and received invoices to customers and from the suppliers. Bookkeeping also records the incoming cash receipts from the customers. It also records transactions involved in payrolls, inventory and other petty expenses involve within the business. Bookkeeping tasks are adequate to run accounting activities of a small business. With the help of bookkeeping tasks a business can also prepare its financial statements as well however these statements are not hundred percent accurate as some of the transactions are not recorded in bookkeeping. These transactions are recorded by the accounting tasks. For example accounting tasks also records accruing costs, accruing expenses, deferred costs and deferred expenses.

Moreover with the help of accounting a firm can create a chart of accounts, it can create a general ledger, accurate financial statements can designed, customized management reports can be created, complete and comprehensive budget can be created, tax return can be complied along with designing a document storage, archiving and destruction system.

The basic difference between accounting and bookkeeping is that bookkeeping is focused on recording repetitive financial transactions. On the other hand accounting can store and record more complex and complicated financial tasks as well. Moreover bookkeeping can be handled by a single person where as for accounting practices you need to have a team of accounting professionals.

Other Related Accounting Articles:

• Definition and Explanation of Accounting
• Definition and Explanation of Bookkeeping
• Journal Accounting
• Accounting System
• Accounting Noise
• Definition and Explanation of Single Entry System
• Regulatory Asset
• Deferred Billing
• Other Comprehensive Income
• Over and Short