leftzip.blogg.se - Difference between book keeping and accountancy

The bookkeeping process does not provide financial statements.įinancial statements like Income statements, Balance-sheet, Cash flows are made from the Accounting process.īookkeeping requires no additional skill set an undergraduate can do the process.Īccounting knowledge is required due to the complexity of the process. Making business decisions from the scattered data available from Bookkeeping is impossible.Īs the primary function involves classifying and grouping data, it is very easy for the management to know the health of the Business and to take unbiased strategies for improvement. Segregating and Posting Financial data under proper heads and interpreting business from the ongoing financial transactions. The primary objectives of Bookkeeping involve storing financial transactions in a chronological manner. Related to summarizing, interpreting, analyzing, and communicating through Ledger and journal. Related to identifying, measuring, and recording financial transactions in a business.

Accountants generally check Bookkeeping before they prepare Financials statements.Ĭomparison Table of Bookkeeping vs Accountingīelow is the topmost comparison between Bookkeeping vs Accounting.

Thus, the accounting finalization needs to be done by an accountant and should be verified through the Auditing process.

Bookkeeping includes the Supplier’s Ledger, customer’s ledger, and general ledger, whereas Accounting involves the preparation of Financial Statements like Income statements, Balance sheets, and Cash flows.

On the other hand, Accounting is followed by Management accounting, where they learn about different types of financial ratios based upon these ratios, the management can make strategic changes and modifications to the business, both long-term and short-term.

Accounting follows the process of Bookkeeping.

However, the functional part includes studying and classifications of Accounting heads/ groups. Whereas analyzing, classifying, interpreting, and segregating accounting data need knowledge of Accounting and Finance.

A bookkeeper may or may not require accounting knowledge they can follow a certain mechanical process to maintain the Bookkeeping task.

In other words, Accounting acts as a bridge between Bookkeeping and Management decisions.

A business cannot be judged by the data accumulated through Bookkeeping until and unless processed through Accounting.

Bookkeeping is defined as maintaining raw data and being processed through Accountancy. On the other hand, Accounting consists of classifying, segregating, analyzing, and reporting transactions recorded by a bookkeeper. Bookkeeping is the art of recording transactions of business as per the Date.Key Differences Between Bookkeeping vs Accountingīoth Bookkeeping vs Accounting are popular choices in the market let us discuss some of the major Differences Between Bookkeeping vs Accounting: While after receiving INR 60000 or 60% of the total Sales, Cash would increase by INR 60000, and Accounts Receivable would decrease by INR 60000. In Accounting, you will post the Sales number in the Income Statement under Revenue and increase the Accounts Receivable by INR 100000 within the next thirty days until you receive a part of the Sales as cash. For example- If a Business Sells goods worth INR 100000 to X Ltd at credit and receives 60% after 30 days, then the Bookkeeping part would only constitute recording the Sales number and the cash received in the figure. Professionals engaged in maintaining Accounts understand that the treatment is not the same. On the surface level, it’s not easy to discriminate between Bookkeeping and Accounting, but the experts can know the difference between Bookkeeping and Accounting. In contrast, accounting helps companies analyze and report their financial transactions to management, investors, tax regulators, etc.

Accounting, businesses use bookkeeping to track the money coming in and going out of the business. Difference Between Bookkeeping vs Accounting