Accountingand Bookkeeping–whatis thedifferencebetween both?

When talking about accounting vs. bookkeeping, it is key to understand what both of these things are exactly, and what are the differences between them.

By Definition, Bookkeeping is primarily about identifying, measuring, and recording financial transactions while Accounting is the process of summarizing, interpreting, and reporting the financial transactions that have been classified into a ledger account.

Bookkeeping and accounting are two extremely important functions for any business organization. Simply put, an accountant is responsible for recording financial transactions, while bookkeeping is responsible for interpreting, classifying, analyzing, reporting, and summarizing financial data.

To learn more about the key distinctions between accounting and bookkeeping, continue reading. The following list summarises the key distinctions between the two:

1.

Decision Making

Management cannot make decisions based on data provided by a bookkeeper. Depending on the data provided by accountants, management can make critical business decisions

2. OBJECTIVE

The purpose of bookkeeping is to keep correct and systematic records of all financial transactions. The goal of accounting is to measure financial status and further report information to the relevant authorities.

3. BUDGET PREPARATION

Budgets and financial statements are not prepared as part of the bookkeeping process. Financial statements are prepared during the accounting process.

4. REQUIRED SKILLS

bookkeeping does not require any special skills, on the other hand, Accounting requires special skills due to its analytical and complex nature