Bookkeeping and accounting are the two critical aspects of any venture. Bookkeeping and accounting keep track of all the financial data of the company that helps in the smooth function of a company. Both bookkeeping and accounting need basic accounting and economics knowledge. The confusion arises between both terms because although they are different, they are used for similar purposes.
Managerial accounting helps the management make proper decisions regarding the future investments of the company.
Main Differences Between Bookkeeping and Accounting
- Bookkeeping records the financial data in a systematic order, but the accounting analyses the financial records and prepares a financial report to the statement.
- Bookkeeping doesn’t help the management in making any decisions regarding finance, whereas the reports prepared by an accountant help the management to make decisions regarding future financial transactions.
- Bookkeeping isn’t used to make the financial reports, but the reports prepared by accountants help in making financial reports.
- A bookkeeper doesn’t need any special skill set to handle bookkeeping, whereas an accountant needs a certificate to do his job.
- Bookkeeping records aren’t analyzed, but they are used by the accountant to prepare their financial summary.
- The two types of bookkeeping are single-entry a double entry. The two types of accounting are cost accounting and managerial accounting.
- Bookkeepers are supervised by the accountants, but certified accountants don’t need any guidance.
- The data is recorded in bookkeeping daily, whereas the financial reports are prepared monthly or yearly depending on the company policy.
Bookkeeping and accounting are both important for a company. They both help the company maintain its finances and help in making better financial decisions.
The bookkeeping records are used by accountants to make a report for the financial summary. Both of them go hand in hand, yet their uses and functions are different.