Bookkeeping vs. accounting: which should you choose as a study option?

Nisar Ahmed is AAT’s Programme Leader at BPP. Nisar has been with BPP for twenty  years, and in this article he talks through the difference between bookkeeping and accounting – a common query when people are looking to start a finance and accounting qualification. 

I had a question from one of my students recently: ‘Should I study Levels 2-4 of the AAT Accounting Qualification to become a fully qualified Accounting Technician, or should I start with the Level 2 Certificate in Bookkeeping and progress on to the Level 3 Certificate in Bookkeeping and Ethics?’

He said that he thought that accountants and bookkeepers did the same job, as he had looked on the internet for synonyms for ‘accounting’ and the search came up with ‘bookkeeping’!

Many people established in the world of finance confuse the two terms to be one and the same, so it’s not surprising that a new student is unsure of the difference. So does it really matter? Are both the same? And what path should you choose to study?

Well, it depends on what you are looking to achieve in your career and where your interests lie.

Bookkeeping

The first thing to note is that the work of a bookkeeper and accountant overlap, as bookkeeping is part of accounting. Bookkeeping, as the word suggests, is about ‘keeping books’ and is the first step in the accounting process. The bookkeeper* is the person who is responsible for keeping an accurate and complete record of the financial transactions of a business. It is, by and large, a mechanical process that does not involve any analysis of the financial transaction, but instead just a recording of the transaction.

However, bookkeepers play a vital role in the efficient running of the business by, for example, recording the payments and receipts of the business while ensuring the correct amounts are paid and received (and at the right time).

The bookkeeper will follow a prescribed set of procedures on a repetitive basis to record each and every transaction that happens on a daily basis. This is then tallied at the end of the day and also at the end of the month. Common bookkeeping tasks such as issuing invoices to customers, recording cash receipts from customers, recording invoices from suppliers, paying suppliers, recording inventory, processing payroll and petty cash transactions are entirely adequate for the accounting needs of very small businesses.

Accounting

An accountant, on the other hand, would focus on the bigger financial picture and performs tasks that affect the whole accounting process. They would build on the information provided by the bookkeeper and then classify, analyse, summarise, interpret and report the financial information. The books must be kept up to date and accurate by the bookkeeper, but then they are passed to the accountant for further financial analysis which adds some meaning.

The accountant would analyse and interpret the financial data for the business to forecast the financial statements and evaluate efficiency. Additionally, the accountant could decide to work in variety of different areas such as financial accounting, management accounting, tax accounting, auditing or financial services.

Because of the similarity in the nature of the work of a bookkeeper and accountant, often the terms are used interchangeably. However, they are two different professions or careers and it will take a student much longer to become a qualified accountant due to the complexity and nature of the work involved.

I hope I’ve helped with the definitions and explanations, and that this makes your decision a little easier if you’re at the start of your career in finance and accountancy.

In terms of choosing between the AAT Accounting Qualification (which will get you well underway to become a chartered accountant) or the AAT Bookkeeping Qualification, you can always get in touch with BPP to talk through your options in more detail. You can also ask a question via the Twitter channel @StudyAAT, which is run by AAT’s Student Recruitment team.  

*In smaller organisations, it may well be that the Bookkeeping and Accounting functions are carried out by the same individual.

This article has been sponsored by BPP. 

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.