Accounting and bookkeeping are two of the most important practices in any business and are oftentimes confused for the same thing. The practices run parallel to each other in the operations of a business and the roles of accountants and bookkeepers are essential to business functions.
The Function of Bookkeeping
The function of bookkeeping is to record daily transactions and is comprised of:
Posting debits and credits
Recording financial transactions
Maintaining and balancing historical accounts, general ledgers and subsidiaries
Most accountants can perform most of the functions of bookkeeping. The most important function of bookkeeping is the balancing of the general ledger; this is done by recording the amounts of sale and expense receipts. A general ledger can be as complex as software or as simple as a lined sheet of paper as it depends on the size and complexity of the business.
The Function of Accounting
Accounting is responsible for classifying, analysing, interpreting, summarizing and reporting financial information. Accounting includes:
Analysing costs of operations
Preparing financial statements
Helping a business owner in comprehending the impact of financial decisions
Preparing adjusting entries
Accounting is subjective and aids in the better understanding of the profitability of the business as well as cash flow awareness.read more about cash flow at http://www.entrepreneur.com/encyclopedia/cash-flow. Accountants are sought by business owners for their help with tax filing, financial forecasting and strategic tax planning. The functions of accounting are able to turn the general ledger’s information into financial statements that reveal a better understanding of the business and the progression of the business. They are responsible for the overall financial handling of a business and will also give advice to a business.
Difference Between an Accountant and a Bookkeeper
The bookkeeper is generally a person who does not have a college degree in accounting, however accountants have college degrees and other accounting certificates which enable them to perform more robust tasks thank a bookkeeper. A bookkeeper only performs the bookkeeping process and this is only one of the processes in the accounting process which is performed by an accountant. Additionally a bookkeeper can eventually move into the profession of an accountant by acquiring the necessary education and certifications. Accountants are responsible for looking at the entire picture and decide how to handle transactions; once the decision is made by the accountant then the bookkeeper will usually carry them out. Bookkeeping concentrates on the day-to-day repetitive financial tasks in a business and accounting encompasses those repetitive tasks and more.read more information on how to find an accountant by clicking here
The two professions are oftentimes confused with each other however, in order for the success of a business; bookkeeping and accounting need to be combined. Both the bookkeeper and accountant perform processes that are essential to the financial success of a business. It is important that both persons work closely together and balance each other out if both are employed at once at the same organization. There are functions that an accountant can perform that a bookkeeper may not have the knowledge to perform.