Business Accounts Tutorial | Basics of Bookkeeping and Accounting 

Book Keeping

Bookkeeping refers to the act of recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeeping should not be confused with accounting. The accounting process is usually performed by an accountant. The accountant creates reports from the financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the Single¬entry bookkeeping system and the Double-entry bookkeeping system. But while these systems may be seen as “real” bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.

A book-keeper also known as an accounting clerk or accounting technician is a person who records the day-to¬day financial transactions of an organization. A bookkeeper is usually responsible for writing the “daybooks.” The daybooks consist of purchase, sales, receipts, and payments. The bookkeeper is also responsible for ensuring the recording of all transactions in the correct daybook, supplier’s ledger, customer ledger and general ledger. A bookkeeper is therefore liable to bring the books to trial balance stage. An accountant may

prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.

Distinguish between Book keeping and Accounting

-Book keeping involves recording of transaction but accounting is the science of recording, classification, analysis and summarizing of business transaction and interpretation of different result.

A book keeper always works under head accountant and is often referred as an account assistant.

-Calculation of tax and filling of tax return is a part of the duties of an accountant. But, he can take help from book keeper for tracking the total of the incomes of business.

-Book keeping is just like machine work in which book keeper passes the vouchers into books but accounting work is fully professional and need high experience for analysis and interpretation of financial statements.

-Most difficult part of book keeping work is to reconcile bank account with pass book, cash balance with physical cash in hand, stock in books with physical stock in Godown. Most difficult work of accountant is to make final account and to analyse financial statements.