| Basis | Book Keeping | Accounting |
| Stage | It is the basis of accounting. | It starts when book keeping ends. |
| Scope | It involves recording, posting, and preparation of trial balance. | It extends to preparation of final accounts and their analysis. |
| Skill | It is the work of clerical staff. | It is the work of senior staff. |
| Operation | It records transaction in systematically manner. | It classifies and summarizes and analyzes the information. |
| Activities | Covers journalizing, posting and extracting balances. | It covers preparation of final accounts and balance sheet. |
| Adjustments | It does not accommodate any adjustments. | Adjustments, transfer and allocations are made in preparation of final accounts. |
| Nature | It’s preliminary in nature. | It processes the primary information into secondary information. |
Advantage of accounting?
- Maintenance of business records
- Preparation of final statements
- Helps in comparison of results
- Helps in decision making
- Good evidence in court.
- Planning and control of operation.
- Provides information to interested person.
- Helps in raising loans
- Helps in complying taxation matters.
What is Matching concept in accounting?
As per this concept, Matching of the revenues earned during an accounting period with the cost associated with the respective period to ascertain the result of the business concern is carried out. This concept serves as the basis for finding accurate profit for a period which can be distributed to the owners.
What is Revenue Realization concept in accounting?
According to Revenue Realization concept, revenue is considered as the income earned on the date, when it is realized. As per this concept, unearned or unrealized revenue is not taken into account. This concept is vital for determining income pertaining to an accounting period. It reduces the possibilities of inflating incomes and profits.
What Is Accrual concept in accounting?
Under Accrual method of accounting, the transactions are recorded when earned or incurred rather when collected or paid i.e., transactions are recorded on the basis of income earned or expense incurred irrespective of actual receipt or payment. For example, a seller bills the buyer at the time of sale and treats the bill amount as revenue, even though the payment may be received later.
What is Accounting Period?
The users of financial statements required periodical reports to ascertain the operational and the financial position of the business concern. Thus, it is essential to close the accounts at regular intervals. viz., 365 days or 52 weeks or 1 year is considered as the accounting period.
What is Double entry system in accounting?
As per Double Entry System of book-keeping, all the business transactions recorded in accounts have two aspects – Debit aspect (receiving) and Credit aspect (giving). For example, when a business acquires an asset (receiving) and pays cash (giving) for it. This accounting technique records each transaction as debit and credit, where every debit has a corresponding credit and vice versa.
How many types of Accounts?
There are basically three types of Accounts maintained for transactions:
- Personal Accounts
- Real Accounts
- Nominal Accounts
What is deference between Income & revenue?
Revenue is the income generated from sale of goods or services or any other use of capital or assets, associated with the main operations of an organization before any cots or expense are deducted.
When cost or expenses get deducted from revenue is called Income or Net Income.
Income = Revenue – Cost or Expenses
