Definitions and explanations:


Accounting is the systematic approach thorough which businesses record, summarize analyze, interpret and report financial transactions and data of a business. This also follows the process of controlling, planning and making informed and well calculated decisions based upon the accounting information.


Bookkeeping is referred to the recording of financial transactions of a business in a summarized manner. Double entry bookkeeping method is commonly used which forms a part of the accounting system of the business.

Difference between accounting and bookkeeping:

The key points of difference between accounting and bookkeeping are given below:

1. Primary Focus:

The primary focus of bookkeeping in a business is to record business transactions in an organized manner normally according to the rules of double entry bookkeeping system. These records lead to the preparation of financial statements which are necessary for a large listed company to publish annually under law. Accounting is more diverse and recording and summarizing of business transaction is an initial part of it. Its main focus is to present the management of a company with such sophisticated financial information that can be effectively used to control and govern the business activities and can assist in the efficacious decision making of the company.

2. Dissemination of financial information:

Accounting aims to disseminate relevant financial information to the relevant users inside and outside the company. The main objective of accounting in a business is the preparation of financial statements. These financial statements are prepared for the use of shareholders and are prepared in light of the international accounting standards applicable in the jurisdiction. However, stakeholders other than shareholders also use these financial statements to make decisions about their dealings with the company. This financial data is also used for internal management uses that make informed decisions about the investment and financing of the company as well as medium-terms and short-term business targets. Bookkeeping does not include the formulation of financial statements of the company but it provides a base of well-segregated and organized financial information which is used to ultimately make financial statements.

3. Types:

Most of the large businesses use double entry bookkeeping systems. However, there are two types of bookkeeping systems; double-entry bookkeeping system and single-entry bookkeeping system. Single entry bookkeeping system is usually used by small business owners and is based upon cash basis. Double entry bookkeeping system is used by medium to large businesses and accounts are prepared based on accruals basis. Accounting has various different types like financial accounting (is related to the financial aspects of business transactions), management accounting (is related to utilization of financial and non financial information for management use), forensic accounting (is related to the use of special tools and techniques to identify and investigate frauds, embezzlements and/or errors), cost accounting (is related to the identification and management of costs incurred by a business) etc.

4. Background knowledge:

Bookkeeping involves the knowledge of related systems and rules. The basic rule of double-entry bookkeeping system is the DEAD-CLIC rule for the recording of transactions. A bookkeeper must also have the knowledge of basic concepts that underpin the bookkeeping system like accruals, matching, business entity etc. However, Accountants require specialist knowledge and expertise to dispense their workplace duties because accounting inculcates aspects of analysis and interpretations of complex nature. Accounting deals with the use of both financial as well as non-financial data. Some branches of accounting require services of special accountants known as chartered accountants that acquire specific knowledge and experience in specialized fields of accounting like audit, finance etc.

5. Scope:

Almost every business transaction passes through the bookkeeping system. The bookkeeping system requires a mechanical approach to perform tasks because it only involves the maintenance of t-accounts, books of prime entry and ledger books. Accounting follows a more inquisitive and scientific approach towards the data and information obtained. Additionally, accounting incorporates both financial and non-financial information.

Accounting versus bookkeeping – tabular comparison

A tabular comparison of accounting and bookkeeping is given below:

Accounting vs Bookkeeping
Primary focus
Interpretation of financial data and information to enable better decision making. Recording and arranging the business transactions according to bookkeeping system.
Dissemination of financial information
Financial information is disbursed as financial statements for external use and budgets, forecasts etc. for internal use. Do not focus on the reporting of financial information but provides a base for its preparation.
Financial accounting, management accounting, cost accounting, forensic accounting etc. are some types. Double entry bookkeeping system and single entry bookkeeping system are two types.
Background knowledge
Requires special knowledge and skills. Requires knowledge related to bookkeeping rules and concepts.
Utilizes both financial and non-financial information. Only deals with the business transactions when they occur.

Conclusion – accounting vs bookkeeping:

Bookkeeping is the first step of recording a business transaction therefore it is the initial phase of accounting which ultimately leads to more complicated uses of financial information in the business. Bookkeeping system has different stages that, if applied accurately, ensure reliability of recorded information. Most important part of bookkeeping is the formation of trial balance which highlights many errors made while recording of financial transactions. Now-a-days many bookkeeping software are available in market which reduce or mitigate the need of maintaining manual books or ledgers. The sophistication and price of these software packages varies according to the complexity of financial needs of a business. On the other hand, accounting is related to the analysis of this information and further utilization of acquired data according to fulfill information needs of the business which requires the subjectivity and cognizance of human resource.