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Whether it is a large-scale business, a small startup or a non-profit organization, a trustworthy bookkeeping system created on customary accounting principles is a must. Organizations also need to maintain organized accounting reports to keep track of their financial transactions. 

Difference between Bookkeeping and Accounting Explained

Accounting and bookkeeping are interrelated terms and are inseparable parts of any business. While accounting is a broader and analytical term, bookkeeping is its subdivision and just a part of it. Here’s highlighting the differences between the two.


Bookkeeping refers to the process of keeping a record of monetary transactions in a methodical way. They show the actual income and expenditure at the end of a financial year. The transactions recorded include incoming and outgoing cash, expenditures incurred, goods bought and sold on credit and others. 

On the other hand, accounting refers to recording, measuring, grouping, summarizing, reporting, and evaluating of monetary transactions in an organization.  It is made by gathering information accumulated by the bookkeeping process.  Accounting reports are made by considering tax revenues, financial statements, and confidential reports to the managers.


The purpose of bookkeeping is to act as a base and platform to create financial statements in an annual financial year. 

Accounting reflects the true financial status and profits generated by an organization. It demonstrates a rational assessment of financial statements to its users that includes employees, investors, creditors, suppliers, managers, government, and the general public. 

Tools Used

The tools used in the bookkeeping process are journals and ledgers. The bookkeeper records all the transactions such as purchase, sales, cashbook, journal, purchase return, sales return and so on. She/he posts them in the concerned ledger and then she/he prepares the trial balance. 

The tools used for creating accounting reports are balance sheet, profit and loss account, and cash flow statement.


The branches of the bookkeeping process include a single entry system of bookkeeping and a double-entry system of bookkeeping.

The branches of accounting consist of financial accounting, cost accounting, management accounting, human resource accounting, and social responsibility accounting.

Task Proficiency

Bookkeeping in an organization is a clerical job. Candidates with little knowledge of commerce can perform the tasks related to it efficiently. 

Accounting is an analytical job and those with expertise and thorough knowledge can excel in it.

To sum up, bookkeeping and accounting are completely different from each other but both are indispensable for any organization both large and small. Hopefully, the blog will help you differentiate between the two clearly.


Published by

Satish Jalan
(Coaching Institute)
Category Accounts   Report

4 Likes   13 Shares   8085 Views


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