At A Glance
The terms accounting and bookkeeping are often used interchangeably, but, in reality, they are not. They are different from one another. The fact is, bookkeeping is a stepping stone of accounting that helps businesses to achieve shared financial goals. Accounting has a much broader scope than bookkeeping, looking at the bigger picture. It allows companies to get a clear picture of their financial status for future decisions.
No one would deny that accounting and bookkeeping are integral to managing a business’s finances. Regardless of the scale and size, companies need to be wise and hire the right people to do the job to see optimal results. When it comes to accounting and bookkeeping, you must acquire the services of experienced and seasoned accountants to get different accounting-related tasks done—the first time. Ideal management of numbers, books, and finances can make or break the entire game of any business. Therefore, they must be handled professionally and in the best tone and fashion.
Bookkeeping and Its Functions
Bookkeeping is the subset of accounting in which financial activities are recorded systematically. The primary purpose of documenting business transactions is to get a snapshot of income and expenditures at the end of an accounting period. The accounting and financial decisions of the company are made based on bookkeeping records. However, it doesn’t reflect the financial position of an organization. It just shows the company’s cash flow status.
Bookkeepers are responsible for recording accurate financial data daily, such as the influx and outflow of cash. Hence, they must have profound knowledge about managing financial books and overseeing accounts, goods sold or purchased on credit, expenditures incurred, etc. Accountants cannot give you comprehensive financial advice without a bookkeeper and their reports. Bookkeepers are tasked with essential duties for which they may be held responsible in a crisis. Some of the core bookkeeping tasks that these professionals perform are as follows.
- Process invoices, receipts, payments, and other crucial financial transactions
- Process payroll for the company
- Reconcile different accounts and prepare reconciliation reports
- Manage accounts receivable and payables
- Calculate GST for the firm
- Design, establish, and review accounting systems and look for improvements in the system
Accounting and Its Functions
Accounting is a process that uses financial information gathered and recorded by a bookkeeper to transmit the entire bookkeeping record to make valuable monetary judgments for a business establishment. Per the business dictionary, “It is a systematic process that involves identifying, recording, weighing, classifying, verifying, summarizing, interpreting, and communicating vital financial information.” Therefore, once an accountant has a clear picture of finances (influx or outflow of finances and the actual status of the firm’s assets, liabilities, and owner’s equity), they have to make critical decisions about the future and, hence, the company’s success.
Unarguably, accounting and bookkeeping services have become a primary need in the modern time. Business owners usually lack the financial wisdom to manage their finances, so they hire professional accountants and bookkeepers. With so many options and access to credible and trustworthy accounting services, businesses prefer to hire accountants’ pro-level expertise. Moreover, this allows businesses to focus more on the business’s core and less on the accounting side of affairs. Some of the core tasks accountants must comply with are as follows.
- Help businesses make critical financial decisions through financial management advice
- Lead companies to maximize tax reductions, reduce costly errors, and save time and money
- Aid businesses in corporate budgeting and financing
- Help a business analyze its performance and file tax bills
- Corporate reporting, auditing, and compliance
- Maintain financial control and aid business owners to understand the impact of economic decisions
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