Both bookkeeping and accounting are relevant tools in keeping financial information in a business entity. They both have to exist in a business entity.
This is the general recording of all financial transactions within a business entity. This recordings can be of a purchase, a receipt payment, sales, and any other smaller transactions done in a business. Bookkeeping can be done by a person who does not have a college degree. The recordings are done by data entry people and sometimes by secretaries in small businesses.
This is the accurate measurement of information recorded in bookkeeping, then processing these information analyzing it and then communicating it to show the economic status of a certain business organization or firm.
DIFFERENCES BETWEEN BOOKKEEPING AND ACCOUNTING
Bookkeeping is a daily activity that records all transactions done. This is different from accounting which does not occur on a daily basis. Accounting uses these recorded information to work out the financial position of the business or firm. Bookkeeping is easier and is usually done by data entry people. It does not require a college degree. On the other side, accounting is complicated an is usually done by people with degrees who have more knowledge.
Bookkeeping can not be used to show how a business is performing. It is simply done for records purposes. In a business, one nees to have information that can be interpreted to show direction of a business. Accounting differs from bookkeeping as the information has been well calculated and analyzed to the extent it can be used by investors,regulators, creditors and the management.
Usually bookkeeping can have information that is not correct. Their recordings are just as the transaction is described. Accounting does not have inaccurate information. All systems of money are tracked and all transactions must balance. In cases of unbalance, the source must be known. Usually accountants advice bookkeepers on how to record the transactions.
Despite the differences, these two activities must go hand in hand with each other for a business to run normally.