What is book keeping in commerce is it accounts?

HELLO JAHNVI VYAS

Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and information pertaining to a business. It ensures that records of the individual financial transactions are correct, up-to-date and comprehensive. Accuracy is therefore vital to the process.

Bookkeeping provides the information from which accounts are prepared. It is a distinct process, that occurs within the broader scope of accounting.

Each transaction, whether it is a question of purchase or sale, must be recorded. There are usually set structures in place for bookkeeping that are called ‘quality controls’, which help ensure timely and accurate records.

Accounting and bookkeeping both are an essential part of every business as they are closely related to financial data. But accounting is much wider than bookkeeping .

the following points to understand the major difference between accounting and bookkeeping:-

1. Bookkeeping is a process of identifying and recording financial transactions. But accounting is an auditing, monitoring accounts and preparing financial reports of a business.

2. Bookkeeping is just a part of accounting, however, accounting is a language of business.

3. Business decisions can be made on the basis of accounting records but cannot be made on the basis of bookkeeping.

4. The main objective of bookkeeping is to maintain proper account of financial transactions, however, accounting is an analysis of the overall financial position of the business.

5. During bookkeeping, financial statements are not prepared. But in accounting, financial statements can be prepared on the basis of bookkeeping records.

6. Bookkeeping is mechanical in nature, so it doesn’t require any special skills. But accounting requires special skills because of its analytical and is a complex process.

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