Accounting Vs. Bookeeping

When discussing a business's finances, in a nut shell, there are two systematic processes; bookkeeping and accounting. As discussed in the curriculum bookkeeping is described more as "recording the financial transactions of a business" (Dixon, 2008) and accounting being the "recording, reporting, and analysis of financial transactions of a business. Accounting also includes the preparation of statements concerning assets, liabilities and the operating results of a business." (Dixon, 2008). Bookkeeping is more a system to keep track of daily transactions, whether that is a purchase by the business or a sale for the business. It is in place to keep track of the day-to-day transactions that might otherwise be looked over if an employee was not there to record it. I found a statement online that actually summed up bookkeeping perfectly which said "Bookkeeping is concerned with the systems that enable the financial information to be extracted in the transactions that generate revenue and incur expense in the business." (StartRunGrow, 2010).

Accounting on the other hand can be more described as "the bigger picture". Basically accounting analyzes information from the books or "bookkeeper" and creates reports for the company/business to decide which direction it is headed and if overall it's a direction of success. This is not to be confused with accountancy which I found to be "giving an account for all your business transactions and this you can only do if it is done correctly and regularly" (Joubert, 2002) and accountants actually "manage" these different accounts hence the term accounting. Typically the accountant is obligated to have a certain amount of education whereas anyone can be trained to "keep the books" but the responsibility for both positions could technically be operated by the same person.

Personally, after researching this concept when I open a small business I would like to work my own "books". By this I mean bookkeeping and the accounting aspect so that I can manage my business with a full knowledge of everything that is going on with my business. I have been brewing beer for several years now with a partner and I am using this MBA program to get a better understanding of how to go about starting our own brewery. This class is very interesting to me because it gives me financial information on where to start. With this type of business there is a lot of cash involved and costs that come with it. So I feel as though if I can start up my business and be able to be my own accountant in the beginning than it will give me the ability to train and trust another individual to take it over in the future.