difference between bookkeeping and accounting

The terms bookkeeping and accounting are related but not the same. Here's a clear breakdown of the difference between bookkeeping and accounting:

📚 Bookkeeping

Definition:
Bookkeeping is the process of recording daily financial transactions in a consistent and organized way.

Key Tasks:

Recording sales, purchases, receipts, and payments

Posting debits and credits

Maintaining ledgers and journals

Reconciling bank statements

Issuing invoices

Focus:
Accuracy in data entry and record-keeping

Who does it?
Bookkeepers (often entry-level finance roles)

📊 Accounting

Definition:
Accounting is the process of interpreting, classifying, analyzing, reporting, and summarizing financial data.

Key Tasks:

Preparing financial statements (income statement, balance sheet, etc.)

Analyzing costs and profits

Managing budgets

Tax planning and filing

Ensuring regulatory compliance

Providing financial advice to stakeholders

Focus:
Understanding and using financial data to make decisions

Who does it?
Accountants (requires more training and qualifications; e.g., CPA)

🧾 Summary Table:
Feature Bookkeeping Accounting
Purpose Record financial transactions Analyze and interpret financial data
Complexity Basic More complex and analytical
Output Journals and ledgers Financial statements and reports
Decision-making Not directly used for decisions Critical for business decisions
Personnel Bookkeeper Accountant (e.g., CPA)
📎 In Simple Terms:

Bookkeeping is the foundation — it’s about keeping track.
Accounting builds on that foundation — it’s about making sense of the numbers.