Bookkeeping and Accounting both are used interchangeably in the financial world, but there is a difference between bookkeeping and accounting. Bookkeeping is a part of accounting whereas accounting itself is a wider concept.
Meaning of Bookkeeping – Bookkeeping means the activity of maintaining financial records on day-to-day basis. Thus, Bookkeeping is a systematic record of financial transactions in the appropriate books of records.
Few activities involved under bookkeeping are;
- Entering invoice and voucher details into Accounting software or ERP systems
- Recording payments received by customers.
- Recording payments made to vendors.
- Recording of expenses made during the year etc.
Meaning of Accounting – Accounting is an art of recording, classifying, summarizing and interpreting the financial information in a significant manner. In simple terms, accounting means keeping a track of our Income, Expense, Assets & Liabilities.
Accounting information is used by various types of parties for several different reasons. Activities involved under accounting are;
- Preparation of Trial balance, Ledger accounts, etc.
- Preparation of Financial statements.
- Analysis of Financial data etc.