Bookkeeping is the Science and Art of correctly recording in books of accounting. All those business transactions result in the transfer of money or money worth.
Bookkeeping Means keeping books of accounts according to Certain Rules and Procedures adopted for the Maintenance of accounts for financial activities.
Bookkeeping may be defined as the science as well as the art of recording business transactions under appropriate accounts.
Generally, it may also be defined as the Art of Recording Mercantile Transactions in a Regular and Systematic manner the art of keeping accounts in such a manner, that a man may know the truth that of his business and Property by an inspection of his books.
Similarities between Bookkeeping and Accounting
On the basis of the above definitions, it is clear that bookkeeping is the Preliminary phase of Accounting but the similarities between these are Traced as follows:
- The scope of bookkeeping is limited to keeping accounts of the transaction but the scope of accounting is extensive in comparison to bookkeeping. Bookkeeping includes accounting.
- Bookkeeping is the basic organ of accounting and accounting depends on bookkeeping.
- All business Organisation Adopt Accounting Principles equally but some differences can be seen in the report of Accounting facts analysis and method of interpretation.
- So the Results of financial transactions are not known by bookkeeping but accounting shows the Result of business.
- The object of Bookkeeping is preparing Preliminary original books (journal, subsidiary books, and ledger) but the object of accounting or Analysing and interpreting Business transactions.
- Bookkeeping is only an art of accounts whereas accounting makes it Mini full Meaningful and objective.
- There is no sub-field of bookkeeping but accounting has several sub-fields like financial accounting, Management Accounting, and cost accounting.
Thus, the similarities and differences between bookkeeping and accounting can be depicted in the following chart:
Accounting Cycle (Explained)
The accounting cycle is a complete sequence of accounting that starts from the recording of transactions or bookkeeping and ends with the preparation of final accounts.
Normally these words are used interchangeably by students, thinking that all of them have the same meaning but this is not correct.
Under book-keeping following activities take place for maintenance of books of accounts:
- Identification of transactions.
- Measuring the transaction in terms of money.
- Recording of the transaction and.
- Classification of transactions.
Where the function of book-keeping and accounting starts the following activities are considered in Accounting:
- Communicates the Accounting information to the Users/Persons/Parties.
- Analysis and interpretation of financial statements.
- Preparation of final accounts in (summary).
Thus, Accountancy Represents the Systematic knowledge according to the 1. rules 2. regulations 3. procedures 4. principles 5. concepts 6. conventions and 7. techniques which are being applied in the process of accounting.
It expresses the why and how to do various aspects of accounting.
So, now we can say that there are lots of similarities and differences between bookkeeping and accounting.