Difference Between Accounting and Bookkeeping
Bookkeeping is the act of recording financial transactions and also preparing financial statements, like the balance sheet and statements of earnings. In day-to-day operation the bookkeeper will ensure that employees are filing their invoices and expenses correctly, and also handling payroll.
What is Accounting?
The accounting process involves calculating income and expenditure. An accountant is accountable for providing financial advice that is strategic and is also informed of the financial position.
What does a Bookkeeper do?
The bookkeeper is usually responsible for one or more of an organization’s financial accounts, also called “the general ledger”. They keep track of every transaction and then post credits and debits. They also prepare financial statements and other documents for managers and supervisors. Here are some common Bookkeeping tasks:
– Accounts Receivable
– Profit and Loss
– Accounts Payable
Types of Bookkeeping
Based on the dimensions and the necessities of your company depending on your needs, you might find that either a double- or single-entry bookkeeping system is best suited to your requirements. Both types of bookkeeping are defined below:
Single Entry System
The first bookkeeping technique we’re going to look at is referred to as a single entry system. It is a basic form of accounting used to track financial transactions within a company (or even a family). The single entry system has been in use for centuries, and has been in use for a long time prior to the use of double entry. Contrary to the double-entry technique, which we’ll go over in detail in the next section it is not necessary for the funds to require a reflection on the credit and debit side of the accounts.
This method of bookkeeping is sort of like cash accounting. It is a simple process of looking at the money flowing out and coming in and then all transactions within the business are written down in a physical journal or in a simple application, such as Excel which is chronologically arranged. One great example is your bank statement. You can review every transaction made in an exact time frame and check whether money was going into your accounts (deposits) and out (expenses or withdrawals).
Double Entry System
The double entry system uses the simple accounting equation “Assets=Liabilities + Capital”. One of the main principles behind the double entry system is the “two-fold effect.” The two-fold effect states that for every value received (debit), there must be a value given up (credit).
It is crucial that an accountant possess the ability to identify the elements that can be affected through a transaction, as well as the impact or consequences of the transaction on those elements.
What does an Accountant do?
A bookkeeper’s accountant reviews the financial data gathered by the bookkeeper, and provides business owners with crucial information about their business and financial planning from that data. Here are some common accounting tasks:
- Adjusting entries
- Conducting audits, generating reports and preparing financial reports documents like income statements, tax returns and balance sheets
- Examining and analyzing data
- In assisting the business owner to be aware of the implications of financial decisions
- Information on business forecasts, trends in the market and growth opportunities
Types of Accounting
The field of accounting is constantly evolving, responding to the different requirements of companies at all levels. Following are the three main types of accounting:
This area is concerned with the consolidation of financial data into reports for external use. Financial accounting requires a thorough understanding about the framework for accounting which is utilized by the person who reads the financial statements of a business that are used by the reader of a company’s financial statements, for example Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). In the event that you are a company held by the public, it is required to be aware of the accounting standards set by the government body that is responsible to oversee publicly-owned company reports in a particular region (such as the Securities and Exchange Commission in the United States). There are a variety of career paths related to financial accounting. There is a particularization in external reporting that typically requires a thorough understanding of accounting regulations. Also, there is the controller track that requires a combination of expertise in management and financial accounting..
There’s a rift in the world of finance and accounting over whether cost and managerial accounting are two distinct entities. No matter what you think on the subject, both aspects of accounting definitely overlap. The principal purpose for cost accounting is to allow businesses to establish their production costs by looking at how much it costs to buy the materials and labour required to produce its products. When the managers are presented with these numbers they are able to compare the costs of producing products with the profits the company made from selling the products. This assists them in establishing an estimate of the plan for the future of projects of the same type.
It is the process of taking note of, measuring, analyzing and communicating financial information to management in the achievement of an organization’s goals. The primary goal for this accounting type is to help those who are internal to the company in making informed decision-making in business. Managerial accounting is a broad area of accounting, all of which aim to enhance the quality of the information that is provided to managers regarding business operation metrics. Managerial accountants make use of information related to the sales and cost profits of services and goods produced through the company. Cost accounting comprises a significant part of managerial accounting that is focused on capturing the total cost of production through analyzing the costs that are variable for every stage of production and fixed costs. It helps businesses find and eliminate unnecessary expenses and to maximize profits.
Difference Between Bookkeeping And Accounting
What is the difference between bookkeeping and accounting? Bookkeeping and Accounting are two roles that are vital to any company. In simple words the bookkeeping function is the record of financial transactions while accounting is accountable for understanding and analyzing, categorizing and reporting the financial information. Bookkeeping And Accounting are both crucial to managing your money. From the first look, both may appear identical, however there are some major distinctions. Bookkeeping is primarily concerned with organizing and recording financial information. Accounting is the presentation and interpretation of the data to the business owners and investors.
Benefits Of Our Bookkeeping And Accounting Services
What would the potential profit of your business become when you have the opportunity to concentrate on your business, instead of juggling an array of administrative duties? Analytix Solutions offers you options to improve the management of your bookkeeping and accounting tasks. Benefit from the technical expertise that our experts at WBS Business Solutions have to assist you in achieving greater profitability by gaining efficiency as well as robust bookkeeping and accounting solutions that allow you to reduce the time you devote working on these tasks. Rapid, cost-effective flexible solutions, that can be scaled, and customized for small-scale business bookkeeping from Analytix can lead to expansion for your company
Aim Of Our Company
We are determined to benefit our clients in challenging business conditions. We are aware that today’s business climate is subject to rapid adjustments like enhancing accounting rules and enhancing the regulations. Additionally, the environment of competition. This is why at WBS Business Solutions, we support every effort to assist our clients succeed in their work environment. Our professional bookkeeping and accounting staff provides our clients with expert consulting services. We also assist with the accounting and financial reporting issues, as well as complex assessment and reporting issues as well as the implementation of modern accounting applications, assessments of business transactions, old clearance letters and notes.