Bookkeeping

Recording of monetary transactions during a proper manner associated with the business operation of an entity is understood as bookkeeping. Bookkeeping is that the permanent recording of monetary transactions during a proper manner within the books of accounts of an entity in order that their financial effect on the business of entity can be seen. There is a difference between the 2 terms bookkeeping and accounting

Bookkeeping and Accounting

Book-keeping and accounting are different from each other. Bookkeeping is an important part of accounting. Accounting is broader than book-keeping. Accounting includes a design of accounting systems which book-keepers use for the preparation of financial statements, audits, cost studies, income-tax statements, etc.

It also facilitates the interpretation of accounting information for both internal and external users for business decisions making. It requires skills and experience of an accountant.

There is a difference between the 2 terms bookkeeping and accounting, let us understand what is bookkeeping and accounting, their processes and difference between the two.

While doing Bookkeeping, we'd like to follow the essential accounting concepts and accounting conventions.

Bookkeeping is clerical in nature. Book-keeping is typically done by junior employees of the entity. Most of the entities nowadays use computers for bookkeeping instead of recording them manually. Accounting of an entity depends on its book-keeping system.

Book-keeping is the basis for accounting. It is because it's liable for the right recording of monetary transactions. Whereas, Accounting involves classification, summarizing and reporting of monetary transactions. It involves the preparation of source documents for all the financial transactions of the entity.

• Process of Bookkeeping

• Identifying financial transactions

• Recording of financial transactions

• Preparation of ledger accounts

• Preparation of trial balance