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Difference between accounting and bookkeeping

A very common question is whether or not there is any difference between accounting and bookkeeping. Our explanation will start with bookkeeping because it is a subset of the larger topic of accounting.


Bookkeeping is the recording of basic accounting transactions such as:

  1. Invoicing customers.
  2. Recording invoices from suppliers.
  3. Recording cash receipts from customers.
  4. Paying suppliers.
  5. Recording changes in inventory.
  6. Processing payroll.
  7. Processing petty cash transactions.

These transactions are mechanical because the bookkeeper follows a prescribed set of procedures on a repetitive basis to record a common activity. These common bookkeeping tasks are good enough for the accounting needs of a small business or maybe a non-profit organization.

A bookkeeper may compile financial statements from the transactions mentioned above and those financial statements will usually be incorrect to some extent because they require additional actions that are normally handled by an accountant.


An accountant would do the following:

  1. Accruing or deferring expenses.
  2. Accruing or deferring revenue.

The broader field of accounting includes the use of these accruals, while encompassing the following activities:

  1. Creating the chart of accounts.
  2. Setting up the general ledger.
  3. Designing the financial statements.
  4. Issuing customized management report which addresses specific issues.
  5. Altering the classification or recording of transactions to meet certain accounting standards.
  6. Creating a budget and comparing it to actual results.
  7. Compiling tax returns from the financial information.
  8. Creating a set of control within which the financial system operates.
  9. Designing a record keeping, archiving, and document destruction system.

Normally, there is at least one trained accountant responsible for the accounting operations of a medium to large-scale business. The accountant is also responsible for setting up the rules that are followed by a large number of bookkeepers.

In short, the difference between accounting and bookkeeping is that bookkeeping focuses on repetitive business transactions, and it is also a subset of the larger set of tasks that are covered by accounting.

There are significant differences between the bookkeeping and accounting professions. The bookkeeper role is broad-based, with one person that typically handles all the accounting transactions for a small business. A bookkeeper is very experienced but likely to lack formal accounting training. On the other hand, the accountant is more likely to work exclusively on a specific area, such as fixed assets, or the general ledger and more likely to have formal training in accounting such as a BA or CPA. There is also a career path for accountants, which leads to high-ranking positions like an assistant control, to name an example.