What is Accounting?
Accounting is the process of identifying relevant business transactions, recording those transactions and communicating the information to others. Transactions must first be identified. A transaction could be a purchase, sell or any other event that affects the business. Once relevant transactions have been identified, they must be recorded properly. This is done by entering the transactions into a journal, and later a ledger under specific accounts. Accounting communicates information to other members of the business, as well as outside stakeholders. Financial statements serve this purpose.
What is Bookkeeping
• Bookkeeping, commonly referred to as keeping the books, is the process of keeping full, accurate, up-to-date business records. Proper bookkeeping can help businesses effectively manage cash flow, stay abreast of profits and losses, and develop plans for the future based on financial trends. Furthermore, accurate bookkeeping is required by both federal and local tax agencies.
• Bookkeeping involves making a record of the monies received by a business as well as the monies paid out. It encompasses money a company owes to vendors, employees, tax agencies, contractors and any other individual or entity. Likewise, accurate records of amounts owed to a company by outside individuals and organizations are also recorded in a company's books.