BOOK-KEEPING VS. ACCOUNTING

DIFFERENCE BETWEEN BOOK KEEPING AND ACCOUNTING

Table of Contents

DIFFERENCE BETWEEN BOOK KEEPING AND ACCOUNTING

To understand the Difference between Book keeping and Accounting, firstly we understand the both terms:

Book-Keeping is an art and science of recording business transactions in a systematic and chronological order. It is a combination of two words: Book + Keeping. It means to keep the books of accounts to record all the financial transactions. It is concerned with identification of transactions and events, expressing them in the monetary form and then recording the transactions in the books of accounts to make it available for future reference also.

Accounting refers to the mechanism of maintaining and keeping the records of the transactions and events and also its analysis and interpretation. It also includes the preparation of final accounts i.e. Trading and Profit and Loss Account and Balance Sheet at the end of the financial year. It is associated with communicating the interpreted results of the financial information to its users.

The Difference between Book keeping and Accounting is as follows:

BASIS OF DIFFERENCE BOOK-KEEPING ACCOUNTING          
STAGE It is the basis of accounting. It is primary stage. It starts where book-keeping ends. It is secondary stage.
SCOPE It is narrower in scope. It is wider in scope.
OBJECTIVE The main objective of book-keeping is to maintain the records of financial transactions. The main objective of accounting is to ascertain the net results and financial position of the business and to communicate them to interested parties.
NATURE OF JOB The book-keeping function is routine and clerical in nature. Accounting function is analytical in nature.
WHO PERFORMS Book-keeping function is performed by junior staff. Accounting function is performed by senior staff.
KNOWLEDGE LEVEL It can be performed by the persons having limited level of knowledge.  It is performed by the persons having higher level of knowledge as compared to book-keeper
ANALYTICAL SKILL The book-keeper is not required to possess analytical skills. The accountant is required to possess analytical skills.
PROCESS The process involves: Identification of transactions, Measurement in terms of money, Recording in Journal, Classifying in ledger, Balancing of ledger accounts, Preparation of Trial Balance.   The process involves: Identification of transactions, Measurement in terms of money, Recording in Journal, Classifying in ledger, Summarising, Analysing, Interpreting, Communicating
ADJUSTMENTS AND RECTIFICATIONS No adjustments are required. Adjustments, transfers and allocations are done as per the policy framework in final accounts.
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AccountingNon profit organisationDepreciationLiquidity ratios
Nature of AccountingReceipts and Payments AccountDepreciation AccountingAcid Test Ratio
Benefits of AccountingScope of accountingHire Purchase AccountingCash Ratio
Difference between cost accounting and financial accountingFinancial accounting, cost accounting and management accountingDifference between hire purchase and instalment systemFinancial ratio analysis
Difference between transaction and eventTransactionsUsers of AccountingRatio analysis
Limitation of AccountingCapital ExpenditureInstalment SystemDifference between consignment and sale
Book KeepingRevenue ExpenditureReserves AccountingAbnormal loss vs normal loss in consignment
AccountancyDifference between capital and revenue expenditureProvisions Treatment of loss on consignment
Accounting as science or an artAccounting EquationSingle entry systemAccounting treatment of consignment
Book Keeping vs accountingDeferred Revenue ExpenditureDifference between statement of affairs and balance sheetJoint venture vs consignment
Book keeping vs accountancyCapital receiptIFRSDepartmental Accounting
Accounting vs accountancyRevenue receiptBalance SheetMethods of departmental accounting
Basis of AccountingDifference between capital and revenue receiptProfit and loss AccountAllocation of expenses in departmental accounting
Branches of accountingDifference between accounting concepts and conventionsTrading AccountInter-departmental transfers
Cash and mercantile system of accountingAccounting StandardsVoyage AccountDifferent types of branches
Accounting PrinciplesObjectives of AccountingAccounting for Incomplete VoyageDepartmental vs Branch accounting
Golden rules of accountingProcess of AccountingJoint ventureMethods of branch accounting
Double entry system of book keepingScope of AccountingJoint Venture Vs PartnershipIncorporation of branch trial balance
Double entry vs Single entry systemAccounting Concepts vs Accounting conventionsMethods of recording transactions in Joint VentureGarner VS Murray Rule
History of AccountingDifference between provisions and reservesConsignment

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