What is the difference between Book Keeping and Accounting
Know about what is Book Keeping & Accounting and what are their differences as under-
Book Keeping-
“Book Keeping is an art of recording in books of accounts the monetary aspects of commercial or financial transactions” –Northcott
It is mainly concerned with record keeping or maintenance of books of accounts. The maintenance of books of accounts includes the following four activities-
- Identifying the transactions of financial nature from amongst the various transactions.
- Measuring the identified transactions in terms of money.
- Recording the identified transactions in the books of original entry.
- Classifying them into ledger.
Accounting -
Accounting starts where book keeping ends. It includes the following activities-
- Summarising the classified transactions in the form of Profit & Loss Account and Balance Sheet etc.
- Analysing and interpreting the summarized results.
- Communicating the information to the interested parties.
Difference between Book keeping and Accounting-
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Particulars
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Book keeping
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Accounting
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Basic
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1. Identifying the transactions of financial nature from amongst the various transactions.
2. Measuring the identified transactions in terms of money.
3. Recording the identified transactions in the books of original entry.
4. Classifying them into ledger.
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1. Summarising the classified transactions in the form of Profit & Loss Account and Balance Sheet etc.
2. Analysing and interpreting the summarized results.
3. Communicating the information to the interested parties
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Stage
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Book keeping is primary stage.
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Accounting is the secondary stage or says Accounting starts where Book keeping ends.
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Objective
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The main objective of Book keeping is to maintain systematic records of transactions of financial nature.
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The main objective is to ascertain the net results and financial position of the business and to communicate them to interest parties.
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Nature of Job
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The Book keeping function is routine and clerical in nature.
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The Accounting function is analytical in nature.
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Knowledge level
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Book keeping can be performed by persons having limited level of knowledge.
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The Accounting function is performed by persons having higher level of knowledge than that of Book keeper.
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Analytical skill
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The Book keeper is not required to possess analytical skill.
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The Accountant is required to process analytical skill.
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Who Performs
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The Book keeping function is performed by Junior staff.
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The Accounting function is performed by senior staff.
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