The terms 'book-keeping' and 'accounting' are often used synonymously. Book keeping is an activity concerned with the recording of financial data related to the business operations in a significant and an orderly manner. Accounting is based on a careful and efficient book - keeping system. In fact, the process of accounting begins where that of book - keeping ends.
The Distinction between Bookkeeping and Accounting are as under:
The Distinction between Bookkeeping and Accounting are as under:
Bookkeeping
|
Accounting
|
1.
It is the recording phase of an accounting
System.
|
1.
It is the summarizing phase of an accounting
system.
|
2.
It is the basis of accounting.
|
2.
It is the basis for business language.
|
3.
Persons responsible for bookkeeping are called
book-keepers.
|
3.
Persons responsible for accounting are called
accountants.
|
4.
It does not require any special skill or
knowledge.
|
4.
It requires special skill and knowledge.
|
5.
Personal judgment of the book – keeper is not
required.
|
5.
Personal Judgment of the accountant is
essential
|
6.
Financial statements are not prepared from
bookkeeping records.
|
6.
Financial statements are prepared from
accounting records.
|
7.
It does not give the complete picture of the
financial condition of the business unit.
|
7.
It gives the complete picture of the financial
condition of the business unit.
|
8.
It does not help in complying with legal
formalities.
|
8.
Legal formalities can be complied with the
help of accounting.
|
9.
It does not provide any information for taking
managerial decisions.
|
9.
It provides information for taking managerial
decisions.
|
10.
It has no branch.
|
10.
It has several branches, e.g., financial
accounting, cost accounting, management accounting etc.
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