When we talk about accounting, in a broader sense, it involves a spectrum of varied aspects. It is basically a process of summarizing, interpreting and communicating the financial transactions that are recorded in the Books of Accounts.
Bookkeeping is a part of this vast umbrella of accounting. There are various Books of Accounts like a General Journal, Cash Receipts Journal, Sales Journal, Purchase Journal etc. These are basically ledgers that have the record of all your transactions.
When we stand to compare the difference between these two, these are a few top points that distinguish them from each other:
1) Primary Object:
Accounting, as the definition states, is the process of summarizing and analyzing all the financial transactions, so its primary object is to study the financial position of the company and implements certain correction measures.
While in bookkeeping, the main object is to record and maintain a record of transactions which will help in analyzing the financial situation of the firm.
A bookkeeping habit contributes in keeping a track of your transactions, but it does not provide any analysis on the financial situations.
Accounting however, provides an overall view assisting the management in taking certain vital decisions for the firm.
3) Financial Statements:
It is a vital process in accounting to prepare financial statements while it isn’t a part of the bookkeeping process.
Bookkeeping has two main types that are single entry and a double-entry booking.
In Accounting there are 4 types, Financial Accounting, Management Accounting, Cost Accounting, Forensic Accounting.
5) Required Skills:
Accountants require mastery in all ways of summarizing, interpreting & analyzing financial transactions. Communicating the same to business owners.
Bookkeepers are required to have good knowledge of bookkeeping principles, organizing the records, attention to detail.
Like we said above, the accounting umbrella is vast and deals with varied aspects.
At Boston Finance, the team is well equipped to provide all assistance relating to accounting and bookkeeping! Get in touch with us today and learn more about how we can assist!
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