Accounting Vs Bookkeeping

What's the difference between accounting and bookkeeping?

Accounting is the big picture, the framework of which a business operates. This encompasses the structure of the business, the type of entity, tax status, accounting principles and concepts that are adopted within the business and the scope of the financial statements.

Many factors come into consideration in making these decisions including regulatory bodies' requirements and basic tax planning issues. Accounting is ultimately responsible for the preparation of the final accounts and therefore dictates which bookkeeping procedures and policies are implemented. 

Good accounting ensures your business is run effectively.

Bookkeeping is the mechanism that collects and verifies the information which is used to produce the above financial statements. This emcompasses systematically tracking all transactions, records, personnel, historical data and the audit trail of all the relating source documents. Bookkeeping is the nuts of bolts of recording your sales, purchases and other relevant information and is ultimately responsible for the systematic recording of all cash flows in and out of the business. 

Good bookkeeping ensures your business is run efficiently.

Together these two functions form the accounting system which is integral to the success of any business.