What is the difference between bookkeeping and accounting?

Vania Wang • October 8, 2020

What is the difference between bookkeeping and accounting?

Accounting and bookkeeping are two crucial parts of managing the finances of your business. At first look, both of these practices may seem similar; however, there are some major differences.

Together bookkeepers and accountants help you make informed decisions as well as avoid issues like embezzlement and fraud. In this post, we take a look at the top five differences between bookkeeping and accounting.

Definition

Bookkeeping is focused on measuring, recording and organising your financial data. However, accounting involves summarising, interpreting and presenting the financial data to business owners and investors.

Decision making

The management cannot take decisions based on the information provided by bookkeeping. Critical decisions can only be made based on the data resulting from the accounting process.

Objective

The primary goal of a bookkeeper is to correctly record all financial transactions in a chronological, systematic and logical manner.

The main objective of an accountant is to identify the financial status or well-being of the business and report this information to the stakeholders. They are, therefore, not focused on the day-to-day tasks of bookkeeping, but instead focus on the assessment and interpretation of key financial data that has been recorded.

Analysis

The bookkeeping process doesn’t call for analysis of any sort. The accounting process relies on the data from bookkeeping to assess it and interpret it and compile it into reports.

Financial statements

As part of the bookkeeping process, no financial statements are prepared. They are prepared as part of the accounting process.

Skills

While bookkeeping does not call for any special skills, accounting requires specialised skills given its analytics, complex nature.

Types

Essentially, there are two forms of bookkeeping – the single entry system and the double entry bookkeeping system. The accounting process is used for preparing a company’s budgets and planning loan proposals.

Scope of work

Bookkeeping generally involves invoicing, bills and receipts, payroll and recording business transactions. Accounting entails budgeting, preparing financial statements and reports, tax returns and assessing business performance.

Choose THN & Samios Partner

Both bookkeeping and accounting are critical part of your business. THN & Samios Partner is an industry leader with over 20 years of experience. Over the years, we have helped businesses across Australia in managing their books and accounts.

Our team is comprised of professional, certified accountants who offer the best advice and service in the industry. Our bookkeepers and accountants keep with the ever-evolving landscape of accounting and are skilled to work with the latest tools and technologies.

By delegating your accounting requirements to us, you can expect to save up to 50% of your costs, while freeing up your time to focus on your core competencies and aspects of business only you can handle.

For any bookkeeping and accounting requirements, get in touch with us or call 02 9602 4644.

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