Write short notes on difference between Book-keeping and Accounting.
Answers
1. Bookkeeping is a process of recording financial transactions on a daily basis such as customer’s recording receipts, paying suppliers, bills of sold good etc. It ensures that the records of every transaction are correct, comprehensive and up-to-date. While accounting defines analyzing, verifying, reporting and recording all the financial information of a business.
2. Accounting is a language of business as the financial health of a business depends upon accounting; however bookkeeping is a small part of accounting.
3. You cannot take business’s financial decisions based on bookkeeping records. However, on the basis of accounting, financial decisions can be made as all financial reports, tax returns and profits or losses are prepared in accounting.
4. Accounting is done on a monthly or quarterly basis, whereas bookkeeping is done on a daily basis.
5. The tools that are used for bookkeeping includes Ledgers, Journals, Calculator etc. The accounting tools include QuickBooks, FreshBooks, Saga Accounting, Xero and Sage Accounting etc. They are much complex as compared to bookkeeping tools and you need proper knowledge before using them.
6. Because of its analytical and complex process accounting needs special skills. For managing accounting work efficiently, an accountant must have experience and education to obtain the title of Certified Public Accountant (CPA). However, bookkeeping does not require any special skills. An accountant usually oversees bookkeepers work.