Bookkeeping creates the transaction record
Bookkeeping captures and organises sales, purchases, receipts, payments and other transactions. Its outputs include ledgers, reconciliations and supporting records that let another person trace a balance back to evidence.
It requires judgement and controls, not just typing data. The person recording a transaction must know what information is missing, how documents are approved and when an unusual item needs review.
Accounting turns records into a reporting conclusion
Accounting includes analysing balances, assessing adjustments, applying the reporting framework and preparing financial or management information. It builds on the transaction record and may identify corrections or further evidence needed before a period can close.
The functions can overlap within a small team. Job titles alone do not establish competence, authority or responsibility for the final reports.
Compare the deliverables
- **Transaction capture:** recorded entries and linked source documents.
- **Reconciliation:** explanations connecting the ledger to banks, customers, suppliers and other evidence.
- **Period close:** reviewed adjustments and an agreed trial balance.
- **Reporting:** statements, schedules or management information for a defined purpose.
- **Review:** identified exceptions, decisions and follow-up actions.
Map these outputs to named owners. A gap often appears when each party assumes that another person checks the balances or deals with missing documents.
How the workflow fits together
Consider a supplier invoice. It must be recorded in the correct period and account, approved and linked to the evidence. The supplier balance is then reconciled, payment is controlled and any unusual treatment is reviewed before reporting.
If the original invoice is missing or incorrectly classified, a polished dashboard does not repair the underlying problem. Correct the transaction and preserve an audit trail of the change.
Which support does a business need?
Start with transaction volume, complexity, reporting deadlines and the existing team's skills. Ask for a scope covering recording, reconciliations, close, reporting and review. Tax advice, payroll, filing and audit work should be identified explicitly where required.
For a process-oriented explanation, read the separate bookkeeping-and-accounting workflow guide. This comparison focuses on roles and deliverables so the business can choose and supervise the right support.
Apply this to your business
Continue with Bookkeeping and Accounting Explained: From Records to Reports for the related question.
