What is the difference between bookkeeping, bookkeeping and accounting?

The difference between bookkeeping, accounting and accountancy lies mainly in the language and nuances of their meaning, with the terms being used in different contexts:

1. Bookkeeping:
   • Definition: Bookkeeping refers specifically to the systematic recording and reporting of a business’s transactions (e.g. income and expenses). It includes all activities that serve to record transactions in the corresponding accounts.
   • Focus: The basics of recording. It is a sub-area of accounting.
   • Example: Each payment or receipt is entered individually into the accounting system (e.g. as a journal book or in electronic form).
2. Accounting:
   • Definition: Accounting is the overarching term that encompasses all of a company’s financial documentation and administration, including bookkeeping, balancing the books and preparing financial statements. It ensures that all financial transactions are correctly recorded and presented in order to meet legal requirements and present the company’s financial position.
   • Focus: The administration and organisation of financial records and their evaluations (e.g. profit and loss statement, balance sheet).
   • Example: Accounting includes both bookkeeping and report generation and analysis.
3. Accounting:
   • Definition: Accounting is the English term for bookkeeping and is used primarily in international or English-speaking contexts. It refers to the entire process of recording, processing and analysing a company’s financial transactions. In some countries, the term may also include aspects such as cost accounting, financial analysis and other business disciplines.
   • Focus: Like accounting, but at an international level and often with a broader focus that goes beyond mere recording (e.g. strategic financial planning or tax planning).
   • Example: In an international company, ‘accounting’ could also include preparation for international accounting (e.g. according to IFRS).

Summary:

• Bookkeeping is the specific process of recording transactions.
• Bookkeeping is the broader term that includes reporting and the preparation of financial statements.
• Accounting is the English equivalent of Buchhaltung and can often be broader, especially in an international context.

In Germany, the term ‘Buchführung’ is often used in legal contexts (e.g. tax law), while in practice ‘Buchhaltung’ is considered the broader, business-oriented term.