Bookkeeping and accounting are two words that are used interchangeably and often referred as the same thing.
Bookkeeping and accounting have common goals in the financial aspect of the business. However, they don’t exactly have the same roles.
If you need some help in bookkeeping accounting, Xero Sydney provides you the best services that you need on this subject.
If you want to learn what bookkeeping and accounting are, this article will help you get started in getting more familiar with these two jobs.
What is Bookkeeping?
Bookkeeping is an important subset of accounting which focuses on recording financial transactions. It involves collecting, organizing, keeping, and obtaining the financial information of an organization to help in running the daily operations and make the preparation of all the financial reports easier.
What is Accounting?
Accounting is a broader field where bookkeeping is a subbranch to it. Accounting involves the interpretation, classification, analysis, and summarizing of financial information.
What is the difference between bookkeeping and accounting?
The main difference between bookkeeping vs. accounting is that bookkeeping secures that the gathered financial information is correct, while accounting includes interpreting and analyzing the financial data.
What Does a Bookkeeper Do?
- Records financial transactions
- The bookkeeper makes sure to record all the money that has gotten in and out of the company or organization.
- Takes note of the debits and credits
- Debits and credits are kept track by the bookkeeper for financial analysis.
- Provides invoices
- The bookkeeper also needs to list all the goods and services that were provided by the company for income.
- Balances general ledgers and maintain other financial records
- They also keep sure that general ledger is balanced and that all financial records are complete and have the correct data.
- Produces payrolls
- It is usually the bookkeepers that produce the daily, weekly, or monthly payrolls of the employees.
What Does An Accountant Do?
- Prepares the adjusting entries
- By the end of the month, there may be other company expenses that may not have been recorded yet during the bookkeeping process. The accountant then records the adjusting entries.
- Creates financial statements
- The accountant provides the financial statement based on the financial records that the bookkeeper has gathered.
- Analyzes costs of operations
- It is also the bookkeeper who provides the estimations of the cost of operations, if it is practical, or if the cost can still be cut.
- Completes the income tax returns
- This helps in calculating the tax liability of the company or if there may be any remit payments or refunds, and it is the accountant who does this job.
- Explains the effects and consequences of every financial decision
- The accountant helps the business owners understand and weigh the impact of every possible financial decision and aid them in finding the best solution or which decision can be more beneficial for the company.
Bookkeeping and accounting are quite similar in a way that they keep track of the organization’s finances. However, they are not entirely the same. Now that you now the difference between the two, use them appropriately and briefly explain it to others if they have any confusions regarding these two subjects.