What Are The Differences Between Bookkeeping And Accounting? Does your firm need accounting and bookkeeping services? Accounting and Bookkeeping are two major financial functions that are extremely important for any business organization. In the simplest of simple terms, we can define bookkeeping as the recording of financial transactions whereas accounting gives you a clearer picture of interpreting, analysing, classifying, reporting and summarizing of financial data. For laymen bookkeeping and accounting can appear to be the same because both deal with the financial data with basic accounting knowledge, classify and generate reports using the financial transactions. At the same time, bookkeeping and accounting are inherently different and have their own set of characteristics and advantages.
Let’s understand the functional difference between bookkeeping and accounting. Bookkeeping is the process of recording, storing, retrieving financial transactions of a small, medium or large company, non-profit organization, an individual person etc. Through bookkeeping the status of the company can be identified if it is generating profits or losses. But the complexity of bookkeeping depends on the number of transactions recorded daily, weekly and monthly along with the size of the business. Bookkeeping is comprised of:
Recording of financial transactions Producing invoices Posting debits and credits