What Is Accounting?

Even before moving forward to the study of accounting, we need to understand what really is accounting and next the difference between Accounting and Bookkeeping.

Below article looks at what is accounting and the difference between Accounting & Bookkeeping.

Accounting is a four stage process of :

1. Recording,
2. Classifying,
3. Summarizing and
4. The interpretation of the financial statements.
   

The details of the four stage process involve:

Recording
- transactions being recorded in the books of the business

Classifying
- sorting and categorizing into meaningful and orderly types or manners

Summarizing
- the accounting data are summarized

Interpreting
- financial data are analyzed and used to assist decision making

The Difference Between Accounting And Bookkeeping

After we understand what is Accounting, Bookkeeping is merely a part of Accounting.
Bookkeeping is:

• Merely a mechanical aspect of recording, classifying and summarizing transaction.
• Keeping the books of accounts is always the theme in bookkeeping.
• The finer aspect of interpreting all these data into information for management to act upon is excluded.