Detailed comparison table including more differences between Bookkeeping, Accounting, and Auditing:
| Aspect | Bookkeeping | Accounting | Auditing |
|---|---|---|---|
| Definition | Recording daily financial transactions. | Classifying, summarizing, analyzing financial data and preparing reports. | Systematic examination of financial records to verify accuracy and compliance. |
| Primary Purpose | To maintain accurate and complete records. | To interpret and present financial information for decision-making. | To provide an independent opinion on financial statements’ fairness and accuracy. |
| Nature of Work | Routine, clerical, mechanical. | Analytical, interpretive, involves judgment. | Investigative, evaluative, and assurance-based. |
| Scope | Recording transactions only. | Includes bookkeeping plus financial analysis and reporting. | Examination of records and statements prepared by accountants. |
| Skills Required | Basic knowledge of financial transactions and recording. | Knowledge of accounting principles and financial reporting. | Expertise in auditing standards, law, and ethical practices. |
| Output | Journals, ledgers, trial balance. | Financial statements (Balance Sheet, Income Statement). | Audit report with an opinion on financial statements. |
| Frequency | Daily or continuous as transactions occur. | Periodic—monthly, quarterly, annually. | Usually annual, or as per statutory/legal requirements. |
| Users of Output | Internal staff or bookkeepers. | Management, investors, creditors, tax authorities. | Shareholders, government authorities, regulators, public. |
| Legal Requirement | Not mandatory by law. | Mandatory for companies and organizations under various laws. | Mandatory for companies and certain entities under law. |
| Tools and Techniques | Use of journals, ledgers, simple software. | Use of accounting software, financial models, spreadsheets. | Use of audit software, sampling techniques, verification methods. |
| Focus Area | Recording facts accurately without interpretation. | Interpreting and summarizing recorded facts. | Verifying truthfulness and fairness of accounting information. |
| Time Orientation | Focus on present and past transactions. | Presenting past data to help in current and future decisions. | Retrospective examination of completed accounting records. |
| Responsibility | Bookkeeper records data as instructed. | Accountant responsible for preparing financial reports. | Auditor responsible for independent verification and reporting. |
| Confidentiality | Maintains confidentiality but limited access. | Deals with sensitive data and analysis. | Highest level of confidentiality and professional ethics required. |
| Correction of Errors | Corrects basic recording errors. | Adjusts entries to reflect accurate financial data. | Detects errors or fraud, recommends corrective actions. |
| Impact on Business | Ensures day-to-day financial transactions are recorded. | Provides strategic insights for business planning. | Ensures trust and credibility in financial reporting. |
| Examples | Entering sales, purchases, receipts, payments. | Preparing budgets, financial statements, tax returns. | Verifying books, examining compliance, issuing audit opinion. |
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