May 28, 2022

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Similarities and Differences between Book Keeping and Accounting

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Similarities and Differences between Book Keeping and Accounting

Definition of Book Keeping Book keeping is an art of collecting and recording financial data in a systematic and organised format for an entity.
The art of book keeping is usually done by non professionals.
In large companies like nestle a computerised accounting system is set up to keep all business transactions. However, a small business may have one or more book keeper who do the recording of business transaction from start to finish.

Further reading: going concern basis.

Various accounting packages such as SAP, Peatchtree, Quickbook, Sage, MS Access have take-over the work load of a book keeper allowing more concerntration in other aspects of accounting such as analysing and interpreting financial statement.

Some accounting software are made to prepare trial balance, weekly, monthly, quarterly and half yearly reports. Some also include cash management system to help management effectively manage their cash.

Definition of Accounting

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Accounting is defined as the process of collecting financial data, recording, classifying and organising such data so as to present them in a financial statement as financial information for the purpose of analysing and interpreting the financial information in other to enable users made informed economic decision.

Read also: detailed explaination of the meaning of accounting.

Accountant are professionals. Many are graduates of Universities, master holders and Phd holders while others are chartered accountant. They are very proefficient in  their works.

Accountants make use of GAAP (Generally Acceptable Accounting Practice), relevant accounting standards, frmework and principles when preparing and presenting finncial statement for end users.

Similarities Between Book keeping and Accounting

(1) Book keeping and accounting perform the activity of collecting, recording and organising financial statement.

Read also: how to keep financial transactions for small business.

(2) A book keeper and also an acccountant are employed in a business entity.

READ ON  USERS OF ACCOUNTING INFORMATION-EXTERNAL

(3) Book keeping and accounting measures data in terms of monetary value.

(4) Book keeping and accounting make used of double entry principle.

(5) Book keeping and accounting have accounting packages that performs most of their tasks.

Differences Between Book Keeping and Accounting

(1) Book keeping is an aspect of accounting same as phonetics is an aspect of English language.

(2) Book keeping only involves collecting, recording and organising but accounting, in addition to the above, prepare and present financial sttements; and also analyse and interprete such statements.

(3) Book keeping is carried out by non-professionals while accounting is carried out by professionals.

(4) Book keeping is an art while accounting is a process.

(5) All of book keeping task is now done by accounting packages while some accounting task must be done by an accountant.

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 (6) Book keeper only make use of only the principles of double entry but accountant makes use of GAAP, accounting standards, frameworks and principles.

Further reading: how to prepare personal budget.

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