Bookkeeping and accountancy are tools used for recording and analyzing the transactions and also maintain the records of transactions which happen on a daily basis in the company. Given below are some of the differences between Bookkeeping and Accountancy –
- Bookkeeping refers to recording of business or financial transactions like purchase done, sales made, daily payments etc…, by the company but accounting is concerned with not only recording of above transactions but also making various adjustments like outstanding payments, depreciation, prepaid expenses etc…, and then presenting it to the other parties in the form of balance sheet and profit and loss account.
- While bookkeeping is more clerical in nature in the sense that same set of transactions have to be recorded and hence it does not require any specialize degree whereas in accountancy there are many dynamic situations which happen and therefore it requires specialization and not everyone can face and deal with such dynamic situations.
- While the work of bookkeeping usually ends with trail balance whereas the work of accountancy usually starts with trail balance and ends with presentation of balance sheet and profit and loss account to the top management. Hence one can say that bookkeeping is the basis of accountancy.
- The emphasis of bookkeeping is on accuracy of books of accounts whereas the emphasis of accountancy is much wider and it involves interpretation of financial statements and if the company has not done well then finding the causes behind such performance.
- Accountancy has many branches like financial accounting, management accounting, cost accounting and so on while bookkeeping does not have any such branches.
As one can see that there are many differences between the two one should not make the mistake of thinking that accountancy does not require bookkeeping because they both complement each other rather than competing each other.