Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organizations. It involves preparing source documents for all transactions, operations and other events of a business on day to day basis.
Accounting is the process of summarizing, interpreting, and communicating financial transactions which were classified in the ledger account.
Bookkeeping and accounting are two functions which are extremely important for every business organization. In the simplest of terms, bookkeeping is responsible for the recording of financial transactions whereas accounting is responsible for interpreting, classifying, analyzing, reporting, and summarizing the financial data.
Bookkeeping and accounting may appear to be the same profession to an untrained eye. This is because both accounting and bookkeeping deal with financial data, require basic accounting knowledge, and classify and generate reports using the financial transactions. At the same time, both these processes are inherently different and have their own sets of advantages.
Particulars | Bookkeeping | Accounting |
Definition | Bookkeeping is mainly related to identifying, measuring, and recording, financial transactions | Accounting is the process of summarizing, interpreting, and communicating financial transactions which were classified in the ledger account |
Decision Making | Management can't take a decision based on the data provided by bookkeeping | Depending on the data provided by the accountants, the management can take critical business decisions |
Objective | The objective of bookkeeping is to keep the records of all financial transactions proper and systematic | The objective of accounting is to gauge the financial situation and further communicate the information to the relevant authorities |
Preparation of Financial Statements | Financial statements are not prepared as a part of this process | Financial statements are prepared during the accounting process |
Skills Required | Bookkeeping doesn't require any special skill sets | Accounting requires special skills due to its analytical and complex nature |
Analysis | The process of bookkeeping does not require any analysis | Accounting uses bookkeeping information to analyze and interpret the data and then compiles it into reports |
Types | Basically there are two types of bookkeeping - Single entry and double entry bookkeeping | The accounting department does preparations of a company's budgets and plans loan proposals |
Bookkeepers & Accountants | Bookkeepers are required to be accurate in their work and knowledgeable about financial topics. Bookkeepers work is usually overseen by an accountant | Accountants with sufficient experience and education can obtain the title of Chartered Accountant (CA) |
As per Income Tax Act, 1961: Sec 44AA(2) of the Income Tax Act, 1961 requires persons carrying on business to maintain books of accounts in certain cases. If a person is carrying on business, he is required to maintain books of accounts if his turnover exceeds Rs. 10,00,000 or his profits from business exceeds Rs. 1,20,000 in any of the three preceding years.
Companies Act, 2013: Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting:
Provided that all or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place:
Provided further that the company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed.
We believe that Bookkeeping and accounting is a very important part of every business. CompaniesHouse has been having combined experience in this domain for over 20 years now and has served several clients in India and abroad. Our team comprises of certified, professional accountants who provide the best services in the industry. Our bookkeepers and accountants are updated with the changing market scenarios and are skilled to work on emerging tools and technologies. By outsourcing your requirements to us, you can save about 50% of your costs and concentrate more on your core competencies.
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Lakshmi Keerthi Reddy Director, Lavanar Sea Food Farming Private LimitedThank you CompaniesHouse for reminding on timely statutory compliance!
Rambabu Director, Cybervillage Solutions Pvt ltdBookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organizations. It involves preparing source documents for all transactions, operations and other events of a business on day to day basis.
Accounting is the process of summarizing, interpreting, and communicating financial transactions which were classified in the ledger account.
As per Income Tax Act: Sec 44AA(2) of the Income Tax Act, 1961 requires persons carrying on business to maintain books of accounts in certain cases. If a person is carrying on business, he is required to maintain books of accounts if his turnover exceeds Rs. 10,00,000 or his profits from business exceeds Rs. 1,20,000 in any of the three preceding years.
Companies Act, 2013: Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting:
Provided that all or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place:
Provided further that the company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed.
The books of account of every company relating to a period of not less than eight financial years immediately preceding a financial year, or where the company had been inexistence for a period less than eight years, in respect of all the preceding years together with the vouchers relevant to any entry in such books of account shall be kept in good order.
If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial Officer or such other person of the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
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