Accounting vs Bookkeeping: Know the differences between them

Accounting vs bookkeeping is the two most used interchangeable words in every organization. Most people often think that these two words are similar and are almost relatable. But the truth is, they are different. There are so many differences between these two terms. This article will help you understand the overview of accounting vs bookkeeping.

What is Bookkeeping?

The term “bookkeeping” refers to the process of documenting all the financial transactions that take place in an organization and classifying them accordingly. The bookkeeper has to maintain a record of every transaction that happened in a business. 

The bookkeeping should be accurate since it can be used for measuring the performance of an organization. A company’s major investment decisions will be based on bookkeeping information. 

Processes involved in Bookkeeping

Bookkeeping involves a series of processes that includes,

  • To identify a financial transaction
  • To record them
  • To prepare the ledger account
  • To prepare the trial balance


Note: Ledger is a document for recording the receipts of all the sales and expenses that occurred in an organization. A ledger can be either a software or a handwritten document. 

Functions of Bookkeeping

In addition to the maintenance of financial transactions within an organization, a bookkeeper should do the below-mentioned functions. Bookkeeping comprises of

  • Completing the payroll
  • Debits and credits posting
  • Producing the invoices
  • Balancing and maintaining the ledgers, historical accounts, and subsidiaries
  • Recommending or managing the accounting software that helps in developing accounting
  • Maintaining bookkeeping procedures and policies
  • Handling bank related activities
  • Verifying the company’s recorded expenses and check whether they are in compliance with the policies
  • Assisting with audits and maintaining backup and archives

What is Accounting?

The term “accounting” refers to the process of analyzing and communicating the financial transactions that are classified and recorded in the ledger by a bookkeeper. Accounting helps in recording all the monetary transactions in a business organization. 

With the help of accounting, one can determine the financial position of an organization and it also helps in making short-term and long-term decisions. It provides a clear view of the financial statements and also produces financial models. 

An accountant is generally more paid than a bookkeeper and usually holds a degree or CPA certification. However, a bookkeeper doesn’t need to be well trained. Accounting depends on the information gathered by a bookkeeper and the accountant oversees the works of the bookkeeper.

Process of Accounting

The process of accounting includes about eight steps. They are

  • To identify the monetary transactions of a company
  • To record them in a journal 
  • To post them on the ledger
  • To calculate the trial balance
  • To create a worksheet and adjust the discrepancies
  • To adjust the entries in the journal
  • To generate the financial statements of the company
  • To close the book by providing the performance report

Functions of Accounting

The functions of an accountant involve the following processes

  • Preparing the entries and record the expenses that are not recorded in the bookkeeping ledger
  • Preparing a company’s financial statements
  • Making the business owner understands the significance of financial decisions
  • Completing the returns of income tax
  • Analyzing the operation costs
  • Overseeing the data management 
  • Assessing the financial data and properly advising the management
  • Generating the business reports and business statements
  • Checking whether the company is following the policies and industry standards.

Accounting Vs Bookkeeping 

We have seen the functions and processes of both bookkeeping and accounting. Now let us look at the major differences between them.


Accounting Bookkeeping
Accounting is about communicating the transactions that are present in the ledger Bookkeeping is about recording the financial transactions of an organization
Accounting data can be useful for making critical decisions in a business Decision making is not based on the bookkeeping data
The main purpose of accounting is to say about the financial situation of a company Its main purpose is to maintain all the transaction records systematically
The company produces the financial statements during this process In the bookkeeping process, the company will not produce the financial statements
Accountants require special skills because it is complex and analytical. Bookkeepers don’t require special skills
Accounting needs analysis and interpretation of data obtained from bookkeeping. Bookkeeping doesn’t need any analysis
The two functions of an accounting department are: Planning loan proposals and preparing the company’s budgets Single entry and double entry are the types of bookkeeping


Accountant vs Bookkeeper

As we have seen, an accountant is well trained and highly skilled than a bookkeeper. The accountant’s responsibility is to take charge of assessing the financial data and determining the financial position of a company. An accountant should handle the recording of every transaction that occurs within an organization. An accountant makes a good income more than a bookkeeper. The accountant is said to have a degree in accounting or finance and have relevant work experience. Accountants of higher experience can obtain the designation of CPA (Certified Public Accountant). To obtain a CPA, one should have proper experience in this field and pass the CPA exam. 

Bookkeepers generally report the records to the accountant. They don’t need any formal education or any certification. It is sufficient to have some idea and knowledge about the financial topics for a bookkeeper. An important thing to become successful in bookkeeping is accuracy. Bookkeepers should be very accurate while recording the transactions. A bookkeeper’s work is usually overseen by an accountant in an organization. Organizations that do not have official bookkeepers, make the accountants do both the work. Since an accountant is more experienced than a bookkeeper in managing finance and transactions, they can do both the work.


In this blog, we have seen what are all the major differences between the terms accounting and bookkeeping. This blog is an overview that provides information about the process, functions, roles, and responsibilities of an accountant and bookkeeper. Though these two terms are interrelated with each other, both of them have different roles and duties. In this blog on accounting vs bookkeeping, we learned most of the basics differences between them.

Frequently Asked Questions


  1. Can an accountant do bookkeeping?

Yes, accountants can also do bookkeeping.


  1. Do you need a degree to be a bookkeeper?

Though it is not mandatory to hold a degree to become a bookkeeper, some organizations prefer bookkeepers holding a relevant degree.


  1. What are the skills of a bookkeeper?
  • Problem-solving
  • Time management
  • Communication skills
  • Transparency 
  • Accuracy and more.

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