Accounting and bookkeeping are very similar terms, but they are not exactly the same thing. Bookkeeping is merely an application of accounting principles, while accounting is the method of selecting methods of accounting. Generally, bookkeeping details the actual financial transactions in a company or organisation. Such records are then used to prepare reports at regular intervals, for review and decision-making purposes.
The basic function of accounting is to keep records of all financial transactions (both positive and negative) and then summarize the information into reports. Accounting and bookkeeping are related because they require the use of ledgers, computer programs and journals to record and summarize information. All transactions are recorded in ledgers, either manually or electronically, and then processed using internal or external software. The main role of accounting is to record the financial aspects of a small business. Accounting is also part of the larger process of accounting in industry and other organisations.
As compared to bookkeeping, which is usually done by manual workers, accounting and bookkeeping are usually performed by computerised accounting systems. The primary difference between the two is that bookkeepers normally carry out the day-to-day clerical tasks, while an account manager controls the computerised ledgers. Some companies also hire certified public accountants (CPA) or laymen to perform the accounting work for them. Certified public accountants (CPAs) or accountants with a practising certificate are required to have a three-year degree in accounting and bookkeeping, as well as a certification from a national accrediting body, before they can practice as accountants.