Accounting and Bookkeeping are two closely related financial processes that are essential for managing and understanding the financial health of a business. While often used interchangeably, they have distinct roles and responsibilities:

Accounting:

Accounting is the process of interpreting, classifying, analysing, reporting, and summarising financial data.

Key Features:

• Prepares financial statements like Profit & Loss, Balance Sheet, and Cash Flow Statement.
• Involves budgeting, forecasting, and financial analysis.
• Ensures compliance with tax laws and financial regulations.
• Helps in strategic decision-making.
• Requires deeper expertise and is handled by an accountant or CPA (Chartered/Certified Accountant).

Objective:

To provide a clear picture of the financial health of a business and help stakeholders make informed decisions.

Bookkeeping:

Bookkeeping is the systematic recording of daily financial transactions of a business. It forms the foundation of the accounting process.

Key Features:

• Records transactions such as sales, purchases, receipts, and payments.
• Maintains ledgers, journals, and other financial records.
• Ensures accurate and chronological documentation.
• Often managed using software like Tally, QuickBooks, or Zoho Books.
• It can be performed by a bookkeeper, usually with minimal interpretation of data.

Objective:

To ensure all financial data is accurately recorded, organised, and easily accessible for future use.