Difference between Bookkeeping and Accounting

Many people possess erroneous concepts regarding Book-keeping and Accounting. Actually they are neither synonymous nor two different subjects.

Book keeping and Accounting play separate roles only in ascertaining final results of financial transactions.

In fact these may be termed as two steps or stages of the same subject. Book-keeping is primary or practical aspect and Accounting is final or theoretical aspect of accounting. Accounting starts from where book keeping ends.

In other words it can be said that book keeping is the basis of accounting and the accounting is the structure based on book keeping.

Apparently any basic difference between Book keeping and Accounting is not marked. The difference which is marked between Book keeping and Accounting is very narrow.

Even in practice it is difficult to draw a clear demarcation between activities of Book keeping and Accounting.

Even then the following distinctions are marked between Book keeping and Accounting;



The art of recording of all financial transactions supported by valid documents in a particular method is called Book keeping.Accounting is the task of preparing financial statements with the help of ledger balances and analyzing and interpreting the financial statements and also communicating the information to the users.
Book keeping is the primary stage of the whole accounting process.

In this stage journalizing, recording and balancing are made.

Accounting is the second or final stage of the whole accounting process.

In this stage financial statements are prepared with a view to finding out financial results and exhibiting financial position and communicating the information to the management and other interested parties after necessary analysis and interpretation.

Person or persons concerned with book keeping are called book keeper or book keepers.The person or persons concerned with final stage of accounting are called accountant or accountants.
The task of book keeping is to record the transactions.

So, in this aspect theoretical knowledge is more important.

The task of accountant is to prepare, present and communicate information. So, in this aspect knowledge of application is more important.
Employees who perform book keeping tasks are considered as lower category employees in the organogram of organization.Accountants possess the status of high officials. That is why in some cases the accountants enjoy the status of financial advisers or directors.
All primary activities – identification, recording arid posting of transactions are included in book keeping.Preparation of trial balance with the help of ledger account balances to prove the arithmetical accuracy of the ledger accounts and preparation of financial statements taking into consideration necessary adjustments and interpretation and analysis are the functions of Accounting.
A book keeper might not be highly qualified as he is not supposed to have knowledge of other relevant disciplines.An accountant is to have professional discretionary power and the knowledge of various laws apart from the knowledge of Accounting.

It may be mentioned that the above mentioned differences between Book keeping and Accounting are theoretical.

But in practice drawing demarcation between these two are not feasible because in most of the organizations the same persons perform both types of tasks.