Same thing, right? Is there a difference?
In a word, YUP! There’s a difference.
So…What IS accounting?
What IS Accounting?
In the last post, I briefly answered the question “What is Bookkeeping Anyway?”… which naturally led to the question, what IS accounting?
The action or process of keeping financial accounts
Say what??? Isn’t that the same thing as bookkeeping? (Defined as: “The activity or occupation of keeping the financial records of a business.”)
Well, yes and no.
They are quite similar but different at the same time.
Accounting picks up where bookkeeping leaves off.
Where bookkeeping is about the dailies, the day-to-day keeping track of the pennies, accounting is about what the dailies mean…
So Accounting Is…
So it’s about the meaning beyond the numbers.
After you keep track of your daily stuff (bookkeeping)… you want to summarize and evaluate what it really means (accounting).
The summaries of it all take familiar form. I’m sure you’ve heard of reports like a Profit and Loss Statement or a Balance Sheet.
These reports are summaries… they are an “accounting” of your “bookkeeping”.
Just like bookkeeping… accounting isn’t all about business. The principles can be applied to personal finances as well.
Soooo… now that you know what accounting is and you now know there is a difference between it and bookkeeping… do me a favor, start glancing at your reports more often!
If you would like more information on bookkeeping and accounting, what it is and how it’s done around these parts… leave a comment below. I would like to hear from you.