In what aspect Accounting is superior to Book-keeping?

Let's understand as to what is Accounting and Book-keeping. Then we will understand how Accounting is superior to Book-keeping? In what aspect Accounting is superior to Book-keeping?

What is Accounting? Meaning and Scope of Accounting?

Accounting is the art of recording, classifying, summarising, communicating the financial transactions of the business entity. Accounting has several branches such as Financial Accounting, Cost Accoutning, Management Accounting, Social responsibility accounting, Forensic Accounting etc.,. Accounting is the broader term. Accounting uses the principles of accounting such as Accounting Standards or Generally Acceptable Accounting Standards to prepare and present the Financial Statements such as Balance sheet, Profit and loss statement and cash flow statement. This will help to know the financial performance and financial position of the business entity. Preparation of Financial Statements is a part of Financial Accounting. These Financial Statements help to depict the financial standings, Financial performance of the business entity. This includes Assets, Liabilities, owners equity, incomes, expenses to disclose the financial performance and position.

The main objective of Accounting is to record the financial transactions, evaluate the financial performance and financial position by preparing financial statements, and communicate these results to the users of financial information. Here financial statements include balance sheet, profit and loss statement and cash flow statement. Users of financial information include creditors, debtors, suppliers, investors, the government, management, and the general public. These financial statements are used by users of financial information to know the financial health and assets & liabilities position

What is the Book-keeping?

Book-keeping is concerned with the complete record of financial transactions in a systematic and logical manner. Book-keeping is concerned with the recording of transactions in the journal and classifying them and posting these accounts to ledgers. Then balancing these ledgers accounts to facilitate the preparation of financial statements. Book-keeping is just the recording phase where the business transactions are recorded. Book-keeping does not involve the presentation and preparation of financial statements to know the financial performance and position.

How Accounting is superior to Book-keeping?

From the above explanation, it is clear that Accounting is far superior to Book-keeping because Book-keeping is just the part of Accounting. Book-keeping is the recording phase while Accounting is the summarising phase of the accounting system. Accounting starts where book-keeping ends. Accounting is the border term that includes recording, classifying, analysing, summarising, communicating the financial transactions while Book-keeping just includes the recording and classifying the financial transactions.

The presentation and preparation of financial statements such as balance sheet, profit and loss statement, cash flow statement is not a part of Book-keeping. Whereas Accounting is complete with the preparation of financial statements. Accounting helps in knowing the financial performance and financial position whereas Book-keeping cannot disclose the financial standings.

Thus, from the above discussion and explanation, we can state and conclude that Accounting is far superior to Book-keeping in several aspects.

What are Ledgers?

What is Trial Balance?

What are Financial Statements? Its features, types, uses

What is Income Statement (Profit and loss a/c)?

What is Balance Sheet (Position Statement)?

What is Cash Flow Statement?

What is Bookkeeping? Its features, objectives, uses?

What are Subsidiary Books? Its features, types, objectives, uses

What is Single Entry System? Its features, types, objectives, uses

What is Double Entry System? Its features, objectives, uses