The purpose of bookkeeping and accounting is to support businesses in their financial process. Keeping accounts are essential for growth of any business. This not only provides insight about the current situation of the business but also helps in the prediction of business’s future.
Both these functions are usually taken as a single unit, but there are few important differences between these two financial terms.
In bookkeeping, records are maintained on daily financial matters including sales, purchases, payments, receipts etc. Few examples of bookkeeping include:
- Producing invoices
- Completing payroll
- Posting debits and credits
- Maintaining general ledger, historical accounts and subsidiaries
Comparatively, accounting is a function of higher level and it deals with verifying data, generate reports, perform audit and prepare records. Examples of accounting include:
- Preparing business financial statements
- Completing income tax returns
- Provide information regarding growth opportunities and business trends