Difference Between Book-Keeping, Accountancy and Auditing

I) Book-keeping is an art of recording the business transactions in the books of original entry and the ledgers. This work is of mechanical nature which does not require knowledge of the principles of accountancy.

Accountancy means the compilations of accounts in such a way that one is in a position to know the state of affairs of the business. The man who performs this work is called an accountant. His work is to interpret and review the accounts and draw conclusions to guide the management in chalking out the future policy of the business.

Auditing means the verifications of book entries and accounts to find out their accuracy. It is neither book-keeping nor accountancy. His work is to find out whether the final account exhibit a true and fair view of the state of affairs of the concern or not and to report his findings to the shareholders.

ii) The spade work is done by the book-keeper and the accountant while the finishing touch is given by the auditor, as has been said that where the work of an accountant ends, the work of an auditor begins.

iii)The task of an accountant is to prepare the trial balance, profit and loss account and balance sheet and the task of an auditor is to report whether the profit and loss account and the balance sheet is prepared in a true and fair way and according to the company act.

iv) book-keeper and an accountant has to record the transactions in the books of accounts while an auditor has to check and verify such transactions and accounts and send a report to the persons who appointed