ACCOUNTING vs BOOKKEEPING

ACCOUNTING vs BOOKKEEPING

Accounting is the art and science of analyzing, recording, classifying, and summarizing, in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character and, analyzing and interpreting the results thereof.

Notice the definition mentioned the recording aspect of the business transaction. This is known as the Bookkeeping. Bookkeeping is the process of recording systematically the business transactions in the order of their occurrence.

Bookkeeping is the groundwork of accounting.  It is the start and necessary phase of Accounting. 

However, Bookkeeping does not confine to recording of business transactions alone. Bookkeeping also covers classifying properly the business transactions. And, at the end of the cycle period, included in the bookkeeping is summarizing the recorded and properly classified business transactions for a given accounting period. 

Accounting completes the periodic works by preparing trial balance and financial statements.  And, consequently, the analysis and interpretation of financial statements are done.

DISTINCTION BETWEEN BOOKKEEPERS AND ACCOUNTANTS

Bookkeepers are those who do the jobs of bookkeeping while an accountant aside from possessing complete knowledge of the bookkeeping activities, the accountant must possess expertise or knowledge in Financial Reporting Standards (FRS) compliance. FRS is the standards set by authorized accounting body to be followed and complied with by all those in the accounting field.  Likewise, business organizations must follow and comply with FRS in reporting and valuation of accounts as reported in their accounting records or books.  And, the accountants have the expertise in detecting faulty recording and classifying of business transactions or if the recording and classifying business transactions are not in compliance with FRS.  In addition, the functions of analyzing and interpreting the financial statements are part of Accounting. 

References : Introduction to Accounting by Adriano, Lim