What is the Difference Between Bookkeeping and Accounting?

Is there a difference? The dictionary defines bookkeeping as the practice or profession of recording the accounts and transactions of a business. The dictionary defines accounting as the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results. You can see that the word accounting means more than just organizing and recording.

The word accounting has the word account as the root of the word, which actually means a report relating to one’s conduct or a reason given for a particular action or event. I believe small businesses need more than just bookkeeping! I also believe you cannot truly be successful without accountability. It is being accountable for or having a reason for your actions that drives performance upwards.

Bookkeeping is a very basic function in accounting. It is the work of recording transactions. It doesn’t go much deeper than that. That is why most bookkeepers are fairly inexpensive since they are not accountable to analyze what the actual accounting records are showing.

A great quote by Thomas S. Monson says

When performance is measured performance improves and when performance is measured and reported the rate of performance accelerates.

Do you have more than just a bookkeeping system? Do you have financial accountability in place? Do you receive weekly, monthly, quarterly reports that keep you on task and on target? Do you have a small business accounting system that creates consistent, duplicable, predictable results every time? If you are a small business owner, then it is critical that you have an accounting system in place, and not just a bookkeeping reconciliation record.