ACCOUNTING VERSUS BOOKKEEPING

Accounting and bookkeeping go hand in hand. But they are not the same thing.

Does an accountant do bookkeeping? Sometimes.

Does a bookkeeper do accounting? Not necessarily.

Accounting includes analysis and decision-making, bookkeeping focuses on tracking transactions

Accounting is a discipline - it follows structured principles, methodologies, and standards

Accounting is a system - it organizes financial information, often based on rules like GAAP

Accounting is a practice - it applies in real world business operations

Accounting is a science - it relies on logic and mathematical principles

Accounting is a profession - it requires expertise, ethics, and formal training

Bookkeeping is all of these things too, and a foundational part of accounting (if they were nesting dolls, bookkeeping would be found inside the accounting doll).

I've met countless bookkeepers who didn't have a great grasp of proper accounting or were entirely unfamiliar with the accounting equation.

Advancements and simplifications in accounting software allow bookkeepers, employees, and business owners to send invoices, receive payments, and pay bills without fully understanding the accounting that happens behind the scenes.

For the lay person, the blurry line between bookkeeping and accounting can get tricky, sticky, and downright messy. Especially when a the system is manipulated to force a transaction without regard for accounting fundamentals.

Related topics:

-The accounting equation

-Certified Public Accountant (CPA)

-GAAP