Bookkeeping Versus Accounting:
A
great deal of efforts goes into gathering and
processing information about a concern before the
facts end up in an accounting report. Much of the
work required is clerical in nature and can be
performed by office workers, machine and computers.
The functions of Bookkeeping is to properly
record the financial transactions in the books of
account. But the function of accounting is more
extensive. It has many other functions to do except
recording transactions, e.g. classification,
summarization and interpretation of transactions.
Thus we see the Bookkeeping is confined to recording
aspect of accounting. It is a small and simplest
part of accounting. Both represent two different
phases of the main subject "accountancy".
Bookkeeping is the first stage, while accounting is
the final stage, that is why, it is said that
accounting starts where bookkeeping ends. The
function of bookkeeping ends with the recording of
transactions in the books of accounts. But the
function of accounting is to classify the recorded
transactions, summarize them, interpret them, and
collect and communicate necessary information to the
management and other interested persons. Management
performs its function on the basis of this
information, e.g. laying down rules and regulations,
taking so many vital decisions etc. Thus we may say
that the function of bookkeeping is primarily of
clerical in nature, while that of accounting is
concerned with organizational and administrative
matters. It is more important and responsible.
Apparently the functions of bookkeeping seem to be
less important than accounting, but its necessity
can hardly be denied. Just an article cannot be
produced without raw material, similarly accounting
function cannot be done without obtaining necessary
data from bookkeeping. Again, If there is any defect
in raw material the article produced out of it will
also be defective. Similarly, if there be any error
or mistake in bookkeeping, the accounting job will
also be wrong and create anomalous situation. Thus
we can conclude that bookkeeper performs the
routine, repetitive tasks of collecting and
processing financial information. Accountants are
responsible for designing the systems within which
bookkeepers work; supervising the day to day work of
bookkeepers; recording unusual and complex
transactions, preparing, analyzing and interpreting
accounting reports; auditing the records; and
performing a variety of other complex accounting
activities.
Accounting Versus Accountancy:
The
two words accounting and accountancy are often used
to mean the same thing. But it is not correct.
Accountancy is the main subject accounting is one of
its branches. The word "accountancy" is far
extensive; i.e. the scope of accountancy is far a
wide and extensive compared to accounting. It covers
the entire body of theory and practice, e.g.
bookkeeping, accounting, costing, auditing,
taxation etc.
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