Bookkeeping and accountancy are two terms that every company craves for. Well, there are solid reasons to accompany this craving. The accounting and bookkeeping services help you to keep a track of all the regular affairs of your company. It needs a strong accountant to manage the regular monetary transactions to prove business efficiency. Both these terms sound similar, but there are certain differences when it comes to utilizing these two services.
Following are the 4 main points of differences between bookkeeping and accountancy:
- Different Definition
Bookkeeping relates to the recording, identifying and calculating the financial transactions. Accounting, on the other hand, denotes summarizing, explaining, and communicating all the monetary transactions mentioned in the ledger. These two verticals have different routes, but their vision is the same. Bookkeeping is actually the first step in booking all the financial transaction in a book called the ledger or ledger account. Accountancy is the number of steps involved to understand this ledge account.
- Different Decision Making Approach
Bookkeeping allows you to simply go through the regular monetary transactions and hence it does not give any explanation to why a particular transaction is shown the way as it is mentioned therein. Bookkeeping, being a limited edition, does not help you in taking a business decision. Accountancy, on the contrary, helps you to analyze the entire data and understand why was it mentioned the way it is found there. This facilitates your decision making process.
- Different Objectives
Although, accounting and bookkeeping services go a hand in hand, there are certain objectives that bookkeeping meets and certain others that are met by accountancy and this stands as a point of difference. Bookkeeping primary objective is to keep a record of all the financial transactions up-to-date and follow its strict and timely maintenance. Accountancy helps you to gauge any discrepancies in the accounts and communicate it further to the relevant department(s).
- Meeting Different End Results
Bookkeeping helps in only maintaining the records. It does not facilitate any financial statement hence end results are missing. Accountancy prepares financial statements on the basis of which various end results are met.