Accounting practice

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What’s the Difference Between Bookkeeping and Accounting?

The confusion between the two largely stems from the fact that they’re both related to financial reporting in one way or another. But these two functions are quite different.

The definition of bookkeeping is managing the books of an organization, while accounting requires evaluating financial information. While bookkeepers record and maintain financial records by entering and monitoring day-to-day transactions, accountants use the financial information compiled by bookkeepers to create advanced financial reports that help business owners make strategic decisions.

Bookkeepers provide a snapshot of the financial health of a business at a given point of time, say a week or month. Accountants, on the other hand, help reveal where the business stands overall and where it is likely to go. This offers a much bigger picture.

But don’t be fooled into thinking that these two functions are completely distinct from one another. They often overlap, and bookkeeping is in fact a subset of accounting. Bookkeeping provides the information that accountants need, while accountants help bookkeepers maintain advanced financial information, requiring a close collaboration between the two.

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