Bookkeeping Vs. Accounting: Difference Between Bookkeeping And Accounting
For many business owners, the difference between bookkeeping and accounting may be unclear. Indeed, both terms refer to a scope of tasks that manage the accounting side of a company and share some common goals. But there are some fundamental distinctions between these two notions.
Bookkeeping implies a more administrative work of keeping financial recording and retaining documentation for transactions. Many bookkeepers begin with performing functions of data-entry clerks and then by gaining more experience in the field, their role within a company may evolve into being an accountant.
The functions of an accountant are more subjective. Their work may also involve reporting and business analysis …show more content…
Such a specialist maintains documentation of each monetary transaction in order to provide correct information on the income and expenses and create a base for subsequent accounting activities.
The main functions of bookkeeping are:
- recording monetary transactions;
- posting ledger entries;
- maintaining ledgers, subsidiaries, and historical accounts;
- filling out payroll forms
Maintenance of the general ledger is the primary task of a bookkeeper. This document reflects the daily data on business transactions such as cash incoming and outgoing, sales and purchase of goods, expenses, etc. A bookkeeper records entries in the day books like cash book, purchase, sales, journal, etc. and then posts the data in the corresponding ledger.
The functions of an accountant
Accounting implies a more complex process that uses financial information formed by a bookkeeper and on the basis of these data it generates a report on the financial condition of a company and other financial statements.
The functions of accounting include:
- Preparation of adjusting records (recording of expenses occurred that had not been yet recorded within a bookkeeping process);
- Preparation of financial statements of a company;
- Analysis of operating …show more content…
To be a successful bookkeeper, an individual is required to be accurate in his/ her work and also be aware of the key financial topics. Usually, bookkeepers are accountable to an accountant or an owner of a small business whose books they maintain. A bookkeeper does not compile financial statements and does not require performing any analytical work.
In order to become an accountant, a person must have a bachelor's degree in accounting. Typically, other financial degrees are considered to be sufficient to qualify a candidate for the position of an accountant if an individual does not have such a specialized degree. Additionally, the profession of an accountant requires certain analytical skills and profound knowledge in financial topics.
Optionally, both bookkeepers and accountants can acquire certification through the corresponding organizations. Bookkeepers can apply to the AIPB (American Institute of Professional Bookkeepers). For accountants, such an organization is AICPA (American Institute of Certified Public Accountants). However, unlike bookkeepers, accountants have the right to obtain more professional certificates. Accountants that have sufficient experience and education can receive the title of Certified Public Accountant (CPA) via passing the Uniform Certified Public Accountant