The Difference Between Accounting and Bookkeeping

Every commercial or non-commercial establishment (a non-profit establishment) needs a reliable bookkeeping system or outsourced bookkeeping based on international accounting principles and standards adopted in the country in which the facility conducts its activities. (Bookkeeping), The latter is an activity concerned with keeping accounting records by recording all information related to the entity’s financial operations and activities, called economic events. You can benefit from online bookkeeping services to manage your work remotely.

The importance of knowing the difference between outsource accounting and outsource bookkeeping?

Every commercial or non-commercial establishment (a non-profit establishment) needs a reliable bookkeeping system or outsourced bookkeeping based on international accounting principles and standards adopted in the country in which the facility conducts its activities. (Bookkeeping), The latter is an activity concerned with keeping accounting records by recording all information related to the entity’s financial operations and activities, called economic events. You can benefit from online bookkeeping services to manage your work remotely.

The problem occurs when the two concepts are mixed. The reality indicates great confusion between them among the owners of emerging projects and even small and medium enterprises. This post is an attempt to explain the difference between accounting and bookkeeping for you as a decision-maker in your organization, and this will enable you to better respond to other challenges you face in your facility or emerging project, the most important of which are:

  • What is the role of the Bookkeeper? What is the role of the accountant?
  • Do I need an accountant for my emerging project? Or just a bookkeeper? Do I need someone dedicated to the role of either of them?
  • What are the internal controls for the bookkeeping process for a small or medium enterprise and its role, which sets it, and how do I establish it without spending too much on management consulting firms. Learn the basics of bookkeeping for small businesses.

The difference between accounting and bookkeeping

Definition of bookkeeping

The term bookkeeping refers to an indispensable subset of activities emanating from the accounting activity in general. It aims in its entirety to collect, organize, store and make available the financial information database for the entity, which is necessary for two primary purposes:


  1. Facilitate and enable the day-to-day operations of the entity
  2. Preparing and preparing financial and tax statements and reports, and internal administrative reports

Bookkeeping (also called record keeping) is the infrastructure for an entity's financial information base, and this structure and base should, in turn, be complete, accurate, and timely. That is, in a timely fashion.

It should be noted here that every administrative procedures system for bookkeeping needs implicit quality controls called internal controls. 


To bring the concept closer, for example, this definition includes keeping the sales book (both deferred or cash) through the sales invoice recording process, or the purchases book in which the Bookkeeper records purchases through its invoices, or the payment book in which vouchers are recorded—financial disbursement from various sources.


Definition of accounting

As for the term accounting, it is much broader, and it is included in the field of designing the bookkeeping system and mechanism itself and setting controls for this mechanism. That ensures the procedural system for recording financial events works well, allowing for analysis and verification of the recorded information. This procedural system for recording events is often referred to as the documentary cycle. Collectively, we can say that accountants give orders and directions while 

bookkeepers follow these orders and abide by them.


Accounting includes matters related to measuring the economic effects of the entity’s economic activity. It is mainly concerned with preparing financial reports for essential values ​​and figures, measuring financial performance indicators, and raising them to those who need this information. Business managers, investors, financial analysts, and others rely on these financial reports to obtain information about the entity's performance and condition.


Among the matters that accountants are concerned with is the design of internal controls for the bookkeeping system to reduce errors in recording the large number of activities that the entity engages in during the financial period, which are controls the entity relies on. That would detect and deter theft, embezzlement, fraud and all kinds of behaviour—other dishonest.


The accountants prepare their reports based on the information accumulated from the bookkeeping process, including financial statements as mentioned above, tax reports, and various other confidential financial reports submitted to the entity managers. In this context, one of the critical measurement tasks performed by accountants is measuring profits or losses. It is a task that depends on the accuracy of the information recorded by the bookkeepers, which the accountant decides after considering how to form it to measure sales revenues and expenditures to determine profits or losses of the financial period accurately. 


Practical implications

Finally, among the essential practical benefits that the decision-maker in the enterprise should pay attention to in this context are things like:


  1. It is not required that the person concerned with the bookkeeping process or records by its routine nature be familiar with the principles and accounting rules, but knowledge of the internal quality controls for the entries of these books, which are usually imposed by the accountants in the facility as mentioned above. This is fully achieved by using electronic systems that help direct the primary operations and record their financial impact in the main accounts of the facility through automatic accounting daily entries.
  2. The real problem is when there is no Lack of Basic Internal Controls imposed by the facility management due to the lack of awareness, which usually helps establish and control the Enterprise Resource Planning (ERP) systems. This is done by adopting and expanding Best Practices in the various documentary courses.
  3. At the beginning of its establishment, your establishment needs to consult a competent accountant who has sufficient experience in your field in which you work to set up a bookkeeping mechanism and its internal controls, either to guide you to the best practices that you can adopt or to design your documentary courses if the nature of your work so requires. You can obtain this service through accounting consulting offices or an ERP application service provider as “notebooks” that have a library of financial procedures based on best practices in addition to sufficient resources and experience in operating these systems.
  4. The role of the experienced accountant in operating after incorporation shrinks to become partial and at the end of each financial period to carry out the reconciliation operations that the books need before extracting the necessary and required financial reports for that period. You can hire a part-time accountant early in your career. If the facility is established and has a thriving business, it needs to hire a full-time accountant, not to keep the books but to carry out the role described below.

The rules of bookkeeping

  • The Bookkeeper must indicate the financial position of the institution.
  • The work must be free from errors and voids
  • If a mistake occurs in the registration, the institution must keep the registration with proof of the cancellation.
  • The Bookkeeper must be prepared according to the form specified by the Governing tax laws.
  • The corporation may not use a new bookkeeper except after the current Bookkeeper ends and the last page has been signed by one of the chartered accountants.
  • Upon stopping the activity, the institution must present the books to the competent employee of the Chamber of Commerce.


What is the importance of bookkeeping?

The business of recording data forms the basis on which all the following accounting work is based, such as:

  • Preparing Financial Statements.
  • Financial Audit.
  • Financial Analysis.
  • Tax data.

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