Today, business is dynamic and differs distinctively from older business modules because of the relatively high competition.
Therefore, businesses today face more challenges that require them to be more vigilant, not just about their core functions, but also their ancillary functions.
Accounting tends to be one of the most crucial supporting functions of the business; therefore, it needs to be catered to avoid any hassles properly.
However, accounting is often confused with bookkeeping, despite some notable differences between these concepts.
In this article, we will describe the key differences difference between bookkeeping and accounting;
Accounting and Bookkeeping – Major Differences
There is no doubt that accounting and bookkeeping tend to be functions that are often interlinked with each other, or seen as subcategories of one another.
Understandably, this tends to give the impression that these terms can be used interchangeably.
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 to keep 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, to ensure that all of the transactions that occur in the company are correctly recorded or booked in the company accounting system by following the company policies and respect the accounting standard that the company being used.
Therefore, bookkeeping is the process that requires accountants to maintain accounting books and records 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 an accounting process that centers on providing recorded and assembled data for the accountants to use.
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 reflect on their performance and the way forward.
Accounting is named as the holistic process which includes bookkeeping and further presenting that data in a meaningful form.
Differences in Duties between Accounting and Bookkeeping
Accounting and Bookkeeping have different duties that tend to be different on several grounds. These duties can be bifurcated into the following points:
Duties of a Bookkeeper:
- Firstly, bookkeepers must ensure they can understand and use the accounting software to record 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 time.
- They are supposed to keep track of incoming and outgoing expenses from the company accounts.
- Bookkeepers should also ensure that they provide the required assistance with the audits. This includes verification of authentication and ensuring that they provide all the records they have maintained over time.
Duties of an Accountant:
The duties of an accountant are an off-shoot of the duties of the bookkeeper. Accountants are supposed to ensure that they can cover the following three areas:
- Data Management: This involves accountants ensuring that they can be on board with the data presented, or recorded, over time by the accountants. This is a very important feature and involves accountants approving bookkeepers’ steps.
- 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. An accountant’s fundamental duty is to ensure that financial statements are prepared in compliance with the standards. Meaningful interpretation of the presented raw data can help companies identify the changes that need to be made internally. This value addition can be termed a game-changer.
- Regulatory Compliance: Regulatory Compliance is also a very important task that has to be undertaken by accountants to ensure that they can abide by the given laws and regulations.
Accountants and Bookkeepers can be considered critical moving factors and parts within an organization. Both are equally crucial and can be considered integral to creating a well-functioning ancillary function within an organization.