Is Bookkeeping Different From Accounting?

Is Bookkeeping Different From Accounting?

Have you ever wondered what could be the difference between bookkeeping and accounting? Well, the two terms are commonly used interchangeably. They both have similar aspects and differences too. To understand the difference between these two terms, think of accounting as the mother and bookkeeping as the child.

What is accounting?

Accounting can be defined as the process by which you record, summarize, generate reports, and analyze financial data. You as an accountant, you will be required to assess the performance of a business based on the financial records. Accounting helps in the preparation of important financial records that company managers use to make sound and informed decisions.

What is bookkeeping?

Bookkeeping involves the recording of financial transactions in a sequential manner for each day. These records are later used by bookkeepers to prepare financial reports. There are a set of rules that are adhered to in this type of record keeping. The main aim of bookkeeping is to ensure that records and business activities are kept in a systematic and accurate way.

Differences between bookkeeping and accounting

Bookkeeping involves capturing of financial transactions in an organized manner while accounting is the analyzing and interpretation of financial data. For example, if you run a café or restaurant in Malaysia and you always buy flour to make pastry, you will need to buy it from a retail shop. The shop will offer you a receipt for the transaction. You as the bookkeeper will be required to capture this information for the accountant to work with later on.

Here, you find that the bookkeeper collects the source documents and arrange them accordingly in a ledger. Towards the end of the business accounting period, the accountant can use this information to analyze and generate reports for decision making (Also see Challenges in bookkeeping and ways to deal with them).


Accounting and bookkeeping revolve around financial data for a business set. In many accounting firms in Johor Bahru, you will find that both an accountant and bookkeeper do more or less the same tasks. The firms require them to arrange and prepare the financial statements (the profit and loss, balance sheet and cash flow statements) and generate reports as well.

The bottom line is that bookkeeping is a subset of accounting which is the bigger picture in financial management.

One thing you should remember is that both accounting and bookkeeping are important functions in the finance department of any business. They play an important role when it comes to recording, organizing, analyzing, and interpreting financial information of a business (Also see Why you should look for a customized accounting service).

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