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bookkeeping vs accounting
bookkeeping vs accounting

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what is bookkeeping in accounting

Before understanding bookkeeping, you have to understand the English Word Book-Keeping. Book-Keeping is made up of two words- a. Book and Keeping. The word book means 'book', whereas the word keeping means 'keeping', that is, keeping the book itself is called book-keeping.

In this way, bookkeeping or bookkeeping is the art and science according to which the accounting of all business financial transactions is done by writing clearly and daily in proper books according to the rules. This book is also known as a ledger account. Today most organizations use commercial software package programs. In which computer helps in keeping books. In this way,

a. Bookkeeping is a part of accounting.

b.Identifies financial transactions and events.

Its important function is to measure financial transactions and events in terms of money.

d. Recording the financial transactions in the Journal or subsidiary books.

e.Classifying all transactions i.e. preparing the ledger.

Features of bookkeeping in accounting

Based on the above definition, the following are the characteristics of bookkeeping and ledger, which are given below in this way -1. accounting in monetary terms

2. Accounting for business transactions

3. Used by all traders

4. Accounting as per rules

5. The Art and Science of Bookkeeping

1. Accounting in monetary terms - This is the most important feature of bookkeeping that only financial transactions are accounted for in this, that is, such transactions are included in it which can be measured in terms of money. These transactions are not included at all. Which cannot be measured in terms of money.

2. Accounting of business deals- All types of business transactions are accounted for under bookkeeping, whether it is related to purchase, sale, purchase return, sale return, profit-loss and income-expenditure.

3. Used by all traders – Bookkeeping is used by all types of traders. Using this, he keeps an account of the financial transactions done in his business.

4. Accounting according to the rules - In bookkeeping, all the transactions are done in the business. The accounting of all of them is done regularly according to the rules. Due to this, it is easy to do further action.

5. Book-keeping is an art and a science – The most important feature of book-keeping is that it is both an art and a science. It lives up to the principles of science and art. In this, systematic fixed rules are followed while accounting for business transactions.

 Objectives & importance of bookkeeping in accounting

The following are the objectives of bookkeeping. Which are given below-

1. Keeping records of business transactions

2. To know the economic condition

3. Goods-related information

4. Correct tax estimation

5. Policymaking

6. Flaw Detection

1. Keeping account of business transactions – This is the biggest objective of bookkeeping it keeps account of business transactions. This is the basis of the business. Without bookkeeping, a trader would not be able to know how many trades he has made.

2. To know the economic condition – A businessman has to know from time to time how is the economic condition of his business. How much money is left in the business and how much profit has been made etc. This is possible only when bookkeeping is being used by the trader and correct entries have been made in it from time to time.

3. Goods-related information – How many goods have been purchased, sold, purchased, returned, etc. in a business through bookkeeping. It is easy to get information related to it. This is the most important objective of bookkeeping.

4. Correct estimation of taxes – The purpose of bookkeeping is also to make correct predictions of tax. The government of every country collects taxes from traders. If the entries made by the businessman in the bookkeeping are kept correctly, then the appropriate amount can be paid under this head. Otherwise, in case of an error, the correct evaluation will not be done.

5. Policy Formulation – One of the important objectives of bookkeeping is policy formulation. Will this policy benefit him in the future or not? This information can be obtained from bookkeeping only. With the help of bookkeeping only the record of the last few years is seen and further action is taken accordingly.

6. Detection of mistakes – In a business, even the owner himself makes mistakes. Bookkeeping helps to catch mistakes. This is an important objective of bookkeeping. 

difference between bookkeeping and accounting

Many people consider bookkeeping and accounting to be the same word. While the truth is that there is a special difference between these two. Following are the differences between bookkeeping and accounting. Which are given below-

1. Basis of Difference – Definition – Bookkeeping is the art of recording business transactions in monetary terms and classifying them in the ledger while accounting refers to the collection, summarization, analysis, and presentation of business-related information in monetary terms.

2. Steps – Bookkeeping is the initial step while accounting is the second step.

3. Basis – Bookkeeping is the basis of accounting while accounting is the basis of auditing.

4. End – Where bookkeeping ends, accounting begins and where accounting ends, auditing begins.

5. Scope - The scope of bookkeeping is limited, it includes a journal (journal) supporting books and account books, while the scope of accounting is wide, it includes trial balance, correction of errors, adjustments, financial statements, analysis, and Explanation is included.

6. Qualification - This work is done by small businessmen, employees, and machines, no special qualification is required to do this work, whereas there is a qualification in accounting.

Benefits of Accounting

  • maintenance of business records
  • preparing financial statements
  • compare results
  • ease of financial decision making
  • evidence in legal cases
  • Provides information to relevant parties
  • Helps in taxation matters
  • business valuation


Here in this post, we discuss all the related terms like types of bookkeeping, methods of bookkeeping, the difference between bookkeeping and accounting, and many more.

FAQ for bookkeeping

Q.1: what is bookkeeping answer in one sentence?

Ans: bookkeeping is a way to record your company's financial data in an organized structure.\

Q.2: Who is the father of bookkeeping?

Ans: Lucas Pacioli.