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Similarities and Differences between Accounting and Bookkeeping Many times, accounting is confused for accounting. Accounting is the systematic way of identifying, keeping records, classification, analyzing and communicating financial information over a given period of time in order to realize the losses and profits of a firm whereas book keeping is a part of the process in accounting through recording of financial transactions. Book keeping provides information essential for preparation of accounts. The two processes have their similarities and differences as outlined below. Similarities Records
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In both accounting and book keeping, records are extremely important. Book keeping requires daily noting down for simple access when it comes to preparing accounts and accounting demands the records for preparation and analyzing of financial statements.
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Classification From the daily transaction records, they are classified to Different novels i.e. bank publication that’s used to document the deposits and withdrawals made, buy book for those records of all purchases made on credit, money book used for the purpose of documenting all cash payments such as trade payables like trade payables and petty cash purchases and money receipts like trade receivables and cash sales and finally the sales book by which non-cash sales are listed together with client’s key specifics and later transferred into the customer’s account. Differences Tools used Accounting uses this income statement, balance sheets and even cash flow statements because its main tools while in publication keeping journals and ledgers are used. Financial statement preparation While book keeping does not require any preparation of Financial statements, accounting is largely the preparation of these financial statements such as balance sheets, profit and loss statement and cash flow statements. Management role The management is not involved in book keeping but they have a special interest in accounting records because it is useful in checking on the performance of an organization and making of future decisions based on that information. Decision making Whereas information provided by publication keepers cannot be Solely utilized to make conclusions, accounting data plays a significant part in making decision making in a company. Job role Publication keeper’s roles are largely to collect, document and Classify information relating to monetary transactions while accounting requires more skilled employees to translate and convey the consequences for decision making. Skills needed Accounting is a bit complicated therefore it requires particular Skills while on the other hand accounting doesn’t require any specific skills because of its simple nature. Categories Accounting is classified to cost, management and financial accounting among other categories while reserve keeping is categorized into single entry and double entry. Lots of people tend to confuse book keeping and accounting to be the exact same thing. However, since we have seen in this paper the two processes Share some common features and as well have their differences that differentiate one from the other.

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