What’s the difference between bookkeeping and accounting?

Bookkeeping and accounting are related but distinct practices in finance. Bookkeeping is the process of recording and tracking financial transactions, such as sales and purchases, and ensuring that records are accurate and up to date. Accounting, on the other hand, is the process of interpreting, classifying, analyzing, reporting, and summarizing financial information derived from bookkeeping records. Accounting provides a broader perspective on a company’s financial health, including creating financial statements and providing advice on tax and financial management. In short, bookkeeping is the first step in the accounting process, while accounting takes the information generated by bookkeeping and provides a higher level analysis and interpretation of the financial data.