ACCOUNTING

Accounting is the process of interpreting, analysing, summarising and reporting the financial transactions of a business. The financial statements prepared in accounting are a precise summary of financial transactions over an accounting period. These statements summarise a company’s financial position, operations, and cash flows.
Accounting consolidates financial information to make it understandable and clear for all stakeholders. It helps businesses to maintain timely and accurate records of their finances.

The accountant maintains and compiles the records of a company’s daily transactions into financial statements such as the income statement, statement of cash flows and balance sheet. The financial statements help to assess the performance of a company by all stakeholders.

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BOOKKEEPING

Bookkeeping is the process of maintaining and recording all financial transactions in the original books of entry of a business. The bookkeeping process involves summarising and organising all the company’s financial transactions chronologically in a systematic manner.

Bookkeeping focuses on the day-to-day financial activities and transactions of a business. The bookkeepers maintain and record the books of accounts. All the financial transactions such as payment of taxes, sales revenue, loans, interest income, payroll and other operational expenses, investments, etc., are recorded in the original books of accounts.

The books of account need to be up-to-date as it is the basis for accounting. The accuracy of bookkeeping determines the accuracy of the accounting process followed by a business.