In the modern day, business is dynamic and differs in a distinctive manner from older business modules because of the relatively high competition that now exists. Therefore, businesses today face more challenges that require them to be more vigilant, just not about their core functions, but also about their ancillary functions.
As a matter of fact, accounting tends to be one of the most crucial supporting functions of the business, and therefore, it is something that needs to be catered to in a proper manner in order to avoid any hassles.
However, accounting is often confused with bookkeeping, despite of some very notable differences between both of these concepts.
In this article, we will describe the key differen difference between bookkeeping and accounting;
Accounting and Bookkeeping – Major Differences
There is no doubt to the fact that accounting and bookkeeping tend to be functions that are often interlined with each other, or seen as subcategories of one another. Understandably so, this tends to give an impression that these terms can be used in an interchangeable fashion.
However, this is not entirely true. Accounting and Bookkeeping are two very different procedures within an organization.
As far as Bookkeeping is concerned, it can be termed as a process where companies record all the transactions that take place in order to keep a track of all the incoming and outgoing of finances transactions within the company.
In this regard, it is highly important to consider the fact that bookkeeping tends to be seen as a record-keeping process, in order to ensure that all of the transactions that occurred in the company are correctly records or book in the company accounting system by following the company policies and respect the accounting standard that the company being used.
Therefore, bookkeeping is simply referred to as the process that requires accountants to maintain accounting books, and records in order to ensure that there are no leakages, or financial differences existing within the books at the end of the respective year.
Hence, bookkeeping can best be described as a process in accounting, which centers on providing recorded and assembled data for the accountants to make use of.
On the other hand, as far as accounting is concerned, it can be referred to as a process within an organization that is necessary for organizations to get a deeper understanding regarding their profitability, as well as liquidity.
Therefore, accounting can be seen as an ancillary function within the organization that helps them to get a reflection about their performance, and the way forward. Accounting, is named as the holistic process which includes bookkeeping and further presenting that data in meaningful form.
Differences in Duties between Accounting and Bookkeeping
Accounting and Bookkeeping has different duties that tend to be different on a number of grounds. These duties can be bifurcated in the following points:
Duties of a Bookkeeper:
- Firstly, it is imperative and important for bookkeepers to ensure they are able to understand and iuse the accounting software in order to records and execute the double entry system of accounting.
- Bookkeepers are supposed to maintain accounts and carry out debit and credit transactions as the account grows and sustains over the course of time.
- They are supposed to keep a track incoming and outgoing expenses from the company accounts.
- Bookkeepers are also supposed to ensure that they provide the required assistance with the audits. This includes verification of authentication, and ensuring that they provide all the records, that they have maintained over the course of time.
Duties of an Accountant:
The duties of an accountant are basically an off-shoot of the duties of the bookkeeper. Basically, accountants are supposed to ensure that they are able to cover the following three areas:
- Data Management: This basically involves accountants ensuring that they are able to be on board with the data that is presented, or recorded, over the course of time by the accountants. This is a very important feature and involves accountants approving the steps that were made by bookkeepers.
- Financial Analysis and Consultation: Value addition and meaningful representation of the data presented is perhaps one of the most integral job descriptions of the accountant. It is the fundamental duty of an accountant to make sure financial statements are prepared in total compliance with the given standards. Meaningful interpretation of the presented raw data can help companies identify the changes that need to be made on an internal level. This value addition can be termed as a game-changer.
- Regulatory Compliance: Regulatory Compliance is also a very important task that has to be undertaken by accountants in order to ensure that they are able to abide by the given laws and regulations.
Accountants and Bookkeepers can be considered important moving factors and parts within an organization. Both of them are equally crucial, and can be seen as integral parts in order to create a well-functioning ancillary function within an organization.