Book-keeping, Accounting and Accountancy

Book Keeping process is referred to the activities of

• Systematically recording,
• Classifying, organizing financial transactions and
• Financial information

of a business/organization in order to create accurate and reliable financial records.

The goal is to provide a clear and accurate picture of a company’s financial health by maintaining an accurate record of all financial transactions, such as sales, purchases, payments, receipts, assets and liabilities. Such records are used for preparation of financial statements, tax returns, and other various other reports.

Accounting (extension of book keeping) helps to

• Summarize the tasks of book keeping through careful analysis and interpretation of the summarized results
• Audit of the books of accounts and
• Communicate the results and information to stakeholders

so that the decision making process is strengthened for the growth of organization.

Accountancy includes both book keeping and accounting processes. It is larger framework and often refers to the profession or the duties of an accountant. Hence scope of accountancy is wider that encompasses

• Book keeping as well as other financial management,
• Analysis as well as decision making functions.

Accountancy involves the preparation and analysis of financial records, reports, and statements to help in making informed financial decisions. This includes tasks such as auditing, financial planning, taxation, and management accounting.

Differences and relation in Book Keeping, Accounting and Accountancy

Accounting depends majorly on bookkeeping while accountancy depends on both bookkeeping and accounting. The main tools in accounting are Manufacturing, Trading and Profit and loss or income statement and Balance Sheet whereas the main tools in accountancy are Concepts, Conventions, Standards, Rules etc. Accountants use the financial records created through bookkeeping to analyze financial performance, identify trends and patterns and provide recommendations for improving financial operations. Book keeping provides the foundation for accurate financial record-keeping while accountancy also provides analysis, interpretation, audit and communication of financial information to have stronger decision making process based on facts and data.