Most individuals are aware that accounting and bookkeeping are connected to finance, but they mistakenly assume that the two fields are identical. While it is true that these fields are both pillars of business finance — that is, they play a fundamental role in assisting businesses in achieving a sound structure, effective operations, and a solid bottom line — they are actually distinct pillars of the process. In order to clear up any confusion, we will briefly go into what the two roles entail and clarify the meaning of bookkeeping vs accounting.

Function of Bookkeeping

Bookkeeping is a fairly narrow concept; bookkeepers simply keep books. More specifically, they continuously document, organize, and produce summaries out of financial transactions in order to organize a business’s recorded activity and keep precise financial information. The highest priority in bookkeeping is the transformation of raw data such as sales, purchases, and payments into coherent financial statements and other reports. This process thus forms the informational backbone of a business, which empowers management to understand its performance at a glance, oversee operations and craft strategy going forward. Bookkeeping is the foundation of the entire accounting process.