Is Accounting and Bookkeeping process same?

Business, typically formed to earn profit: which has become the determinant for the growth of business. So apart from the core competence, the business should also focus on its financial structure for further growth and development. Monitoring the financial department, is a huge challenge and a very responsible task which needs additional care. Here comes into the picture, the two important terms: Accounting and Bookkeeping.

What both actually is and How it differs???

Recording the day-to-day financial activities of business, carried out by bookkeepers is what called as bookkeeping. This recorded financial information is again processed by accountant and produced generally in financial form statement to users such as shareholders and managers is what the process called as accounting.

When looking deeply into both the terms, Accounting and Bookkeeping it can be explained as:

Accounting:
Accounting is a process of recording business transactions systematically.It includes additional reports and further financial analysis of the transactions. Accounting involves four steps:

1. Recording the transactions (obtained through bookkeeping) in the proper ledger accounts.
2. Categorizing the transactions into meaningful and orderly manners.
3. Summarizing all the data collected.
4. Analyzing and Extracting these financial data in the form of various financial statements and records for users such as shareholders and managers and for the future use.

Bookkeeping:

As said earlier, Bookkeeping is the traditional process of recording day-to-day business transactions. Bookkeeping does not require any analysis it is just a mechanical process of recording. In olden days, the transactions were recorded and kept in books and thus they named as Bookkeeping. Nowadays there are many Bookkeeping Soft-wares like Numia which simplifies the task of the bookkeepers.

There are two types of Bookkeeping, Single Entry Bookkeeping and Double Entry Bookkeeping. In Single entry bookkeeping, each transaction is carried to either the debit column or the credit column. It uses only income and expense accounts. Whereas, Double entry bookkeeping records each transaction twice using credits and debits.This is done in the way that the two entries can be checked.



Now it is clear that Bookkeeping is just a part of accounting and both are not same. This is how the two important financial term differ.