While often used interchangeably, accounting and bookkeeping are distinct but interconnected processes. Bookkeeping is the foundational process of recording and organizing financial transactions. It involves tasks like data entry, maintaining ledgers, and generating reports.
Accounting, on the other hand, involves a higher level of analysis and interpretation of financial data. Accountants use the information generated by bookkeepers to analyze financial trends, make forecasts, provide financial advice, and prepare financial statements. In essence, bookkeeping is about capturing data accurately, while accounting focuses on analyzing and interpreting that data to provide strategic insights.