Accounting vs. Bookkeeping: What Is the Difference?

Aspiring students and professionals who are considering a career in the financial industry are often faced with the question of whether to pursue a career in accounting or bookkeeping.

While these two roles may appear similar on the surface, they are distinct positions that require different skills and responsibilities.

In this blog, we will explore the difference between accounting and bookkeeping and highlight what each position entails.

What does a Bookkeeper do?

A bookkeeper is responsible for recording and maintaining an accurate record of a company's financial transactions. Bookkeeping professionals are the foundation of any successful business, and their work is vital for accountants to create accurate financial statements.

What are a Bookkeeper’s day-to-day responsibilities?

A bookkeeper's primary responsibility is to manage the daily financial transactions of a business.

This includes recording transactions such as sales, purchases, and expenses. They are also responsible for maintaining accurate and up-to-date financial records, such as general ledgers, balance sheets, and income statements.

A bookkeeper's primary responsibilities include:

• Recording financial transactions
• Maintaining financial records
• Reconciling accounts
• Managing accounts payable and receivable
• Generating invoices and billing statements
• Preparing financial reports for accountants

What skills are required to be a successful Bookkeeper?

Bookkeepers are required to possess excellent attention to detail and strong organisational skills. They must be proficient in basic accounting principles and familiar with accounting softwares to ensure that financial data is entered accurately and efficiently.

Additionally, bookkeepers must have strong communication skills to collaborate with the business owner or accountant and ensure that all financial information is recorded accurately.

What does an Accountant do?

An accountant, on the other hand, is responsible for analysing and interpreting a company's financial information to provide insights that aid in decision-making. Accountants use the financial data recorded by bookkeepers to create reports, budgets, and forecasts that guide business decisions.

What are an Accountant’s day-to-day responsibilities?

Accountants may work in various capacities, such as tax accountants, audit accountants, management accountants, or financial analysts. Regardless of their specialty, accountants are responsible for providing strategic financial advice to a business to help them achieve their goals.

The primary responsibilities of an accountant include:

• Creating financial reports
• Conducting financial analyses
• Developing budgets and forecasts
• Assisting with tax preparation and filing
• Advising clients on financial strategy and investment decisions
• Conducting audits and reviews

What skills are required to be a successful Accountant?

Accountants typically possess a degree in accounting, and they are required to be licensed in Australia. They must have a strong understanding of accounting principles and tax laws to ensure that financial statements are accurate and comply with government regulations.

What is the main difference between Bookkeeping and Accounting?

While bookkeeping and accounting are related fields, there are fundamental differences in the scope of responsibilities and the skills required.

Bookkeeping as a subset of accounting

One way to differentiate the two roles is to view bookkeeping as a subset of accounting. Bookkeepers record financial transactions and maintain accurate financial records, which are then used by accountants to create financial reports and provide strategic financial advice.

Level of qualification required

Bookkeepers and accountants also differ in their level of education and professional certification.

While a degree is not required to become a bookkeeper, most accountants possess a Bachelor's degree in accounting or a related field. Additionally, accountants are required to pass a certification exam and maintain continuing education credits to keep their license current.

Level of analysis required

Another significant difference between the two professions is the level of analysis required in each role.

Bookkeepers are primarily responsible for recording financial transactions and generating financial reports. In contrast, accountants are expected to provide strategic financial advice and conduct financial analysis to help a business achieve its goals.

Which career path is right for you?

Deciding between a career in bookkeeping or accounting largely depends on your career aspirations and personal strengths. Both are excellent career paths for individuals who are detail-oriented and organised.

Is Accounting a good career?

An accounting career is a good choice for individuals who enjoy working with numbers and are interested in finance.

The financial industry is constantly evolving, and accountants are consistently in demand across all
industries, including government, non-profit organisations, and the private sector.

Is Bookkeeping a good career?

Bookkeeping is an excellent career choice for individuals who enjoy working with numbers and are detail-oriented.

While bookkeeping does not require a degree, bookkeepers do need to have a good understanding of accounting principles and be proficient in using accounting software. Bookkeepers work in a supportive role, ensuring that the company's financial records are accurate and up-to-date.

Melbourne Polytechnic’s Accounting and Finance courses will teach you the skills to meet the needs of small businesses and multinational corporations, from Certificate to Degree qualifications.