Difference Between Bookkeeping and Accounting

Bookkeeping vs Accounting

Bookkeeping and accounting are two different departments dealing with the accounts of company. Bookkeeping is the initial stage, in which we keep the record of income and expenditure, whereas in Accounting department accountants analyze the company’s financial activity and prepare reports. Both are very important for the proper management and financial success of a business.


In simple words, recording the financial dealings of a company or individual is bookkeeping, like sales, purchase, revenues and expenditures. Traditionally, it is called as bookkeeping since records were kept in books; now there are specific software for this purpose, but the old name is still in use. Usually, bookkeepers are appointed to keep the record in accurate and precise manner. This activity is very important for the financial health of a company, as it informs the management about up to date financial condition of their company. Commonly used books are, daybook, ledger, cashbook and business checkbook, many others are also used, according to the nature of business. A bookkeeper enters a particular financial activity in its respective book and post to the ledger as well. Single entry and double entry are two types of bookkeeping. As the name suggest, in single entry a transaction is either recorded in debit or in credit column of the same account, but in case of double entry, two entries of each transaction are carried to ledger, one in debit column and other under credit heading.


Accounting deals with organized recording, reporting and analysis of financial activity of a company. Making statements regarding assets and liabilities also come under the jurisdiction of accounting. Accountants are also responsible for making monthly fiscal statements and yearly tax returns. The accounting departments also do preparation of company’s budgets and plan loan proposals. Moreover, they analyze the cost of company’s products or services. Now a day, Accounting is called language of business, as it provides required information to many people, for instance, Management accounting is the branch, which keep the mangers of the company informed. Financial accounting informs the outsiders, like bank, vendors and stakeholders, about the financial activity of company. The nature of information for the outsiders and insiders is different, that is why big companies need both of these branches.

Differences and Similarities

Both are different sections of finance department, bookkeeping involves the keeping of systematical record of company’s financial activity, where as accounting is the next section, which analyze these records to prepare different reports and proposals. Bookkeeping in the procedure, which helps the management to manage day-to-day financial activity of company, whereas Accounting justifies these financial actions and find their reasons. In large companies, accounting department is also very large to analyze the fiscal activity of business, on the other hand, an individual usually does Bookkeeping or at the most two people are involved in this activity, even in big companies.


Bookkeeping and Accounting are essential for the successful running of any business. Bookkeeping is important as it is the primary stage of keeping financial records and accounting is the building of analysis based on the brick of bookkeeping.

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