Bookkeeping and accounting are two terms that are often used interchangeably. But both of them are different. The difference between bookkeeping ad accounting can be analysed from the below advantages and limitations:
Bookkeeping
Bookkeeping Means the recording of financial transactions and is part of the process of accounting in business and other organizations. Transactions include purchases, sales, receipts and payments.
Advantages of Bookkeeping
- Better Tax Prediction.
- Faster Business Response Time.
- Faster Financial Analysis.
- Always Compliant with the Law.
- Instant Reporting.
Limitations of Bookkeeping
- It distracts you from your purpose.
- Consistently handling your numbers could be discouraging.
- You could make a mess of your books.
- It is costly and time-consuming.
Accounting
Accounting means the process of recording financial transactions pertaining to a business. The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company’s operations, financial position, and cash flows.
Advantages
- Maintenance of business records.
- Preparation of financial statements.
- Comparison of results.
- Decision making.
- Evidence in legal matters.
- Valuation of business.
Limitations of Accounting
- Accounting information is based on estimates.
- Accounting information may be biased.
- Recording of Fixed assets at the original cost.
- Manipulation of Accounts.
- Money as a measurement unit changes in value.
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