The Differentiation between Bookkeeping and Accounting for Better Accounting Knowledge

The main fact is that every business requires a reliable bookkeeping system bases on the advanced accounting system. In reality accounting is much broader than the bookkeeping. Apart from that bookkeeping is the necessary process of maintain all the records of the entire transactions and financial activities of a business. In this accounting assignment help, we are writing the main difference between the Booking and Accounting for the students.

Book Keeping: Bookkeeping stands for arranging entries in order to make it convenient for sorting entries. It does not have any algorithm or standard protocol to follow; it could vary depending on one’s choice. Bookkeeping is part of accounting which refers to only recording transaction. It could be manual or electronic recording of day to day transaction. Book keeping can be further classified as Single-entry book keeping and Double entry book keeping in which single entry book keeping refers to simply recording the entries in ledger while double entry book keeping is more error free as it involves recording entries in two ledgers at the same time so that any error in the entries could be rectified easily. There is set of rules for double entry book keeping system. It could be computerised like accounting but book keeping is only a basic part of accounting as accounting involves recording entriesi.e. bookkeeping and then further processing this useful data into information for taking valuable decision Thus book keeping is only the raw data.

Accounting: Accounting is broader term as it involves arranging entries in income and expenditure forms to make it convenient to find the profitability of firm at any moment. While Accounting follows the standard protocol defined by the ICA i.e. body of chartered accountants. Accounting is not merely recording transaction, it involves measurement, processing of information for finding desired results or forecast to take appropriate decisions. Accounting can be further classified depending upon its area of application i.e. Cost accounting, financial accounting, management accounting etc. There are professional body for regulations of standard of accounting. Accounting is further processing of this raw data into information so that company director could know the financial status of institution at any time and take appropriate decision. There are various governing bodies for setting protocols for accounting and bringing updates in accounting internationally so that there is always a standard for defining the financial status of firm and same information could be easily exported or imported and there should be no need for translation of information as all information is in its standard forms.

The one of the main difference is that Bookkeeping doesn’t reflect the financial position of an organization and accounting clearly shows the financial position of the entity easily. The main purpose of the accounting is to provide the true and fair view of the financial statement to the investors, employees etc.

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