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 common financial goals. Looking at the bigger picture, accounting has a much wider scope than bookkeeping. It helps businesses get a clear picture of their current financial status for future financial decisions.
No one would deny that accounting and bookkeeping are integral parts of managing a business’s finances. Regardless of the scale and size, businesses 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 for getting 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 main purpose of documenting business transactions is to get a snapshot of income and expenditures at the end of an accounting period. Accounting and financial decisions of the company are taken based on bookkeeping records. However, it doesn’t reflect the financial position of an organization. It just shows the cash flow status of the company.
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. It is safe to say that accountants cannot give you comprehensive financial advice without a bookkeeper and their reports. Bookkeepers are tasked with important duties which they may be held responsible for 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 account 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 for making valuable financial 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 owners’ equity), then he/she has to make critical decisions about the future and, hence, the success of the company.
Unarguably, accounting and bookkeeping services have become a primary need of the modern time. Business owners usually lack the financial wisdom to manage their finances, so they tend to 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 of their suiting. 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 that accountants need to comply with are as follows.
- Help businesses to make important financial decisions through financial management advice
- Lead businesses to maximize tax reductions, reduce costly errors, save time and money
- Aid businesses in corporate-budgeting and financing
- Help a business analyze their performance and with filing tax bills
- Corporate reporting, auditing, and compliance
- Maintain financial control and aid business owners to understand the impact of financial decisions
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