The difference between bookkeeping and accounting

Technically speaking, the terms Bookkeeping and Accounting are distinct in their scope  and definitions. 

Bookkeeping involves recording financial transactions, whereas  accounting revolves around the interpretation of books. 

Accounting also involves the  analysis and reporting of financial data generated by a business. 

In practice, most people tend to use these terms interchangeably. 

A bookkeeper is the one  who works at the grassroots level and is responsible for generating records of transactions as and when they happen. 

On the other hand, an accountant is a person who  delves into the, thus generated, transaction records to derive meaningful insights. 

Hence  accounting takes care of broader scope of finance. 

These insights could be from different  perspectives, like taxation, production targets, forecasts, sensitivity, and other analyses. 


It is a systematic recording process that organizes the financial transactions of a business.  

There is an account for everything. In order to ensure accuracy in the captured data,  bookkeepers follow the concept of double-entry accounting. 

The practice translates into  maintaining a dual parallel record for each and every financial transaction. 

Therefore,  each credit entry will have a corresponding debit entry in the books of account. 

The essence of accurate bookkeeping is precision in capturing the data about financial  transactions. 

Business decisions rely heavily on past performance data captured through  bookkeeping. 

Bookkeeping is a straightforward process. 

The bookkeeper will recognize the financial  transaction and record the relevant details in books. 

The next step is to reconcile the  recorded data into a ledger account. 

Followed by the development of Trial Balance, the  basis for the preparation of Financial Statements. 


It is a systematic process of measuring and reporting information derived from financial  transaction records. 

Business leaders rely on accounting reports to make decisions. It is  also a way of communicating the business’ performance to external parties like investors  and other stakeholders. 

Accountants maintain a close liaison with bookkeepers of the business as they seek clarity  on the recorded transactions. 

Once an understanding is achieved, accountants can go  ahead and analyze the financial records.

Importance of Bookkeeping and Accounting for businesses 

Bookkeeping is the mainstay for any business. 

Hence regardless of business size,  bookkeepers always find work with companies. 

When a business is small in size, the  management may not realize the significance of accounting. 

Bookkeepers are required  throughout the year to record financial transactions. 

Accountants are needed at regular intervals (quarterly, semi-annually, and annually) to compile the records for reporting  purposes. 

These reports are consumed by the government, investors, creditors, lenders,  etc. 

As the business grows in size, the scale of financial transactions grows manifold. 

Large  businesses employ several bookkeepers based at different locations. 

The generated  records are merged and analyzed to prepare for future growth. 

With the advent of  technology devices, bookkeeping and accounting are no longer done on physical  documents. 

Custom devices and software help businesses easily maintain vast financial  transaction records. 

The financial position of a business can be obtained at any point in  time. 


In order to run a business efficiently, accurate knowledge of overall finances is of critical  importance to the management. 

While bookkeepers capture the transaction, accountants  help improve efficiency by checking the work done at ground level. 

Auditors are the  internal or external accountants who act as an added line of defense against inaccuracies  in record keeping. 

Having both a bookkeeper and an accountant will ascertain business  success as you receive advice from different perspectives. 

Bookkeeping and accounting complement each other, and both are like the blood and  veins of a successful business.


Bookkeeping Lead offers virtual bookkeeping & accounting services to small businesses looking to scale up their business while improving their organization efficiency.

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