Bookkeeping, Accounting and Accountancy
Arjun EP
Relation among Bookkeeping, Accounting and Accountancy
Bookkeeping is the first stage of keeping financial data for recording process transaction.
Accounting starts where bookkeeping ends.
Accounting is the process or work to keep recording financial transactions and make financial statements.
Accountancy starts when accounting ends.
Ordinary people think that accounting and accountancy are similar but they are different.
Accountancy refers to the duties of profession of an accountant.
Rests of other points are explained below:
(A) Bookkeeping
Bookkeeping is the combination of two words ‘book and keeping’.
Book is the collection of financial data or information; keeping is the process of recording these data.
Bookkeeping is an art of keeping a permanent record of financial transactions of an individual, a business firm, a state government, a central government.
Therefore, bookkeeping refers the act of keeping financial transactions in regular, systematic and scientific way.
Bookkeeping is the work of a bookkeeper; he is junior than accountant.
He records the day-to-day financial transactions of a business.
Generally, he maintains the daybook; which contains recording of sales, purchases, receipts, and payments.
Cash transactions are recorded in daybook or cash book.
Credit transactions are recorded in purchase book, sales book, debtor book and creditor book.
From these books, financial transactions are recorded either in journal entries or in ledger accounts.
Bookkeeping refers mainly to the record-keeping aspects of financial accounting, and involves preparing source documents for all transactions, operations, and other events of a business.
The bookkeeper prepares trial balance from the balances of ledgers accounts.
Thereafter, an accountant can create financial reports from the information provided by the bookkeeper.
An accountant may prepare the income statement and balance sheet by using the trial balance and ledgers prepared by the bookkeeper.
(B) Accounting
Accounting is the process or work to keep recording financial transactions.
It is broader than bookkeeping.
It starts when bookkeeping ends.
Accounting is the language of business.
It is an analysis and interpretation of book keeping records.
It is an art of measuring, recording and communicating of financial information.
It includes maintenance of accounting records as well as preparation of financial and economic information.
Accounting is an information system.
It measures, processes and communicates financial information for decision makers.
Business activities are identified and measured in terms of money.
Then processed and finally communicated to the various groups of users.
Without accounting, the financial transactions are only data.
They are converted to information by the accounting processing system.
In simple meaning, accounting is a story of value or money.
From where the money come, how much the money worth, how much the money cost, how much value for money exchange and how much of money is in hand at any given time.
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Click on link for YouTube videos topic wise : |
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Accounting Equation |
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Basic Journal Entries in Nepali |
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Basic Journal Entries |
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Journal Entry and Ledger |
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Ledger Account |
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Subsidiary Book |
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Cash Book |
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Trial Balance and Adjusted Trial Balance |
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Bank Reconciliation Statement (BRS) |
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Depreciation |
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Click on link for YouTube videos chapter wise: |
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Financial Accounting and Analysis (All videos) |
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Accounting Process |
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Accounting for Long Lived Assets |
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Analysis of Financial Statement |
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(C) Accountancy
Accountancy refers to the duties of profession of an accountant.
Accountancy is the process of communicating financial information about a business organization.
Accountancy is the art of recording, classifying and summarizing financial transaction in a significant manner and interpreting the results thereof.
This financial information is used by management and shareholders to take decisions.
Accounting is an information system.
It measures, processes and communicates financial information for decision makers.
Business activities are identified and measured in terms of money.
Then processed and finally communicated to the various groups of users.
Without accounting, the financial transactions are only data.
They are converted to information by the accounting processing system.
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