Bookkeeping vs Accounting: What's the Difference?

Bookkeeping and accounting are two pieces of the financial process which are immensely important for every business organization. In simplest terms, bookkeeping is responsible for recording financial transactions, whereas accounting is responsible for interpreting, classifying, analyzing, reporting, and summarizing financial data. Bookkeeping and accounting may appear the same profession to an untrained eye. Both accounting and bookkeeping deal with financial data, require basic accounting knowledge, classify, generate reports using financial transactions and financial accounting software. At the same time, both these processes are inherently different and have their own sets of advantages.

What is Bookkeeping?

Bookkeeping is the method of systematic recording and classification of financial transactions of an organization. Bookkeeping is the basis of accounting, whereas accounting forms a part of the broader scope of finance. The most crucial focus of bookkeeping is maintaining an accurate record of all the business's monetary transactions. Companies use this information to take significant decisions. The bookkeeper maintains primitive financial records. Accurate bookkeeping is necessary for business as it provides reliable information on a company's performance. Bookkeeping consists of identifying and recording all financial transactions.

What is Accounting?

Accounting is the systematic recording, measurement, and communication of information regarding a business's financial transactions. Accounting aids in determining financial situation and communicating it to stakeholders. It aids a company's short- and long-term decision-making and communicates its credibility to the market. It is also known as the business language. Accounting aims to give users a clear picture of financial statements, such as investors, creditors, employees, and the government.

Differences Between Bookkeeping and Accounting

  1. Management cannot make business decisions based on the data bookkeeping provides. Instead, they make decisions based on information provided by accounting.
  2. Bookkeeping does not require any special skills, whereas accounting requires highly specialized skills because of its analytical and complex nature.
  3. The bookkeeping process doesn't require analysis, but accounting uses bookkeeping information to analyze and interpret data compiled into reports.
  4. The main objective of bookkeeping is to keep all financial transactions recorded systematically and adequately. Accounting aims to gauge a company's financial situation and communicate that information with the relevant people.
  5. To become a bookkeeper, one needs to know a wide range of financial topics and transactions. In most instances, a bookkeeper's work is overseen by an accountant.

Typically, an accountant must have a bachelor's degree in accounting or finance to qualify for the title. Unlike bookkeepers, accountants may be required to acquire a range of different professional certifications.


Bookkeepers' and accountants' work often overlap, as bookkeeping is a part of the accounting process. A bookkeeper records and classifies a company's daily financial transactions, e.g., sales, payroll, bills, etc. Their focus is on accurate record-keeping. On the other hand, an accountant builds on the information provided to them by the bookkeeper. Their job is to analyze, interpret and report the information to the company's leadership. The accountant performs most leg work, but the bookkeeper is also a vital part of the financial process.