1.

Distinguish between Book Keeping and Accounting.

Answer»

Bookkeeping and Accounting

The terms book-keeping and accounting are used interchangeably, but they differ from each other. Accounting is a wider concept and includes Book Keeping.

Book-keeping involves the chronological recording of financial transactions of an organization in a set of books in a systemic manner. The main function of a book keeper is to maintain the books of original entry i.e., Journal, Ledger, etc.

It involves: 

  • Identifying financial transactions and events 
  • Measuring them in terms of money. 
  • Recording the identified financial transactions and events in the books of account. 
  • Classifying recorded transactions and events
Accounting is on the other hand is much wider term which includes recording, classifying and summarizing of financial transactions and also making interpretations of the results of the business and report to the users. It starts where book keeping ends.

 It involves: 

  • Special skills and ability to analyze and interpret. 
  • Objective is to ascertain net results of operations and financial position and to communicate information to the interested parties.


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