When we hear about bookkeeping and accounting, numerous doubts come to our minds. But the most common doubt is, “Are both the same?” It is a genuine doubt that might strike in your minds at least once in life as both come into use to maintain the financial transaction data of an organization. So, let’s clear all of your doubts about accounting and bookkeeping by thoroughly reviewing the subjects. In this blog post, we will cover all the quintessential details to address the difference.
Bookkeeping is the process of collecting, storing, and retrieving an individual or an organization’s financial transaction data regularly. These transactions include; purchases, receipts, and sales. Bookkeepers are the professionals who manage the responsibility of the entire bookkeeping process.
When it comes to businesses, bookkeeping has a significant role as it systematically provides all financial transactions. It is also necessary for all financial transaction sources like government, financial investors, and institutions.
Furthermore, it includes two processes, which are the Single-Entry Method of bookkeeping and the Double-Entry Method of bookkeeping.
General bookkeeping responsibilities
We are mentioning some of the typical roles and responsibilities in bookkeeping:
- Making an initial financing statement regularly
- Processing a payroll system and recording it daily
- Processing all the invoices
- Creating and filing VAT returns
- Managing accounts receivable and accounts payable
- Processing payments, receipts, and other financial transaction data
- Filing and document management
- Offering basic tax advice
- Recording Journal entries
What are the bookkeeping services?
Bookkeeping services provide all the necessary monetary transaction information to the companies that utilize this information to make significant investment decisions. The bookkeeping services include the following tasks:
- Recognizing and storing financial transaction data
- Bookkeeping services help to keep the entries of all debits and credits of a place accurately
- Preparing invoices
- Creating and keeping general ledger accounts
- Preparing and maintaining the trial balance.
What accounting is all about
Accounting is a process in which professionals record, analyze, interpret, and summarize an organization’s economic data. Accounting validates the history of bookkeeping and prepares its financial transaction report.
It allows the stakeholders and investors to determine the financial situation of a company. With the help of accounting, the company can make short- and long-term financial decisions and takes the organization’s credibility to the market.
The prime focus of accounting is to provide its users with a clear and sensible viewpoint of the monetary statements that include government, creditors, employees, and investors. Typically, you can say that accounting is the language of business.
There are multiple branches of Accounting:
- Management Accounting
- Cost Accounting
- Financial Accounting
- Social Responsibility Accounting
- Human Response Accounting
Basic accounting responsibilities
Accounting has various roles and responsibilities in an organization. A few of them are as follows:
- Adjusting the financial transaction entries
- Analyzing of company’s performance
- Financial transaction Interpretation
- Financial transaction management advice
- Tax strategy and planning
- Making business plans and cash flow forecasts
- Preparing monetary statements and reports
- Preparing and completing income tax returns
- Organizing budgets
Process of accounting
The Accounting comprises the given vital points:
- Keeping adjusting entries
- Create ledger account and trial balance
- Formulating and analyzing monetary statements
- Interpreting and assessing the operational cost
- Completing tax returns
- Measuring the impact of decisions of finances.
Bookkeeping vs. accounting
As we have discussed, everything about bookkeeping and accounting started from introducing the processes to the roles and responsibilities. We have covered all to give our readers a generalized idea about both methods. Although we have provided an overview of both approaches, addressing proper distinctions between both the procedures below:
- Bookkeeping is a procedure that includes recording, storing, and retrieving an organization’s monetary transaction data regularly. In contrast, accounting records, analyzes, forecasts, and summarizes an organization’s financial transaction data.
- The prime motive of bookkeeping is to manage the records of each financial transaction fairly and adequately. On the other hand, the goal of accounting is to analyze the financial position and report the information of the concerned personnel.
- We can say that bookkeeping is the root of accounting, whereas accounting is the language of business.
- Preparing a financial transaction statement does not come under bookkeeping. The accounting process is used to prepare financial transaction statements.
- There are no specific skill sets needed for bookkeeping. On the contrary, accounting requires a few special skills due to its analytical and critical nature.
- Using the bookkeeping process, companies can never assess the business’ financial situation.
- With the help of accounting, businesses can forecast the company’s financial position.
- The term bookkeeper is used for the professional involved in the bookkeeping process.
- An accountant is a person taking care of accounting.
- Data given by bookkeeping is not being used by businesses to make decisions. On the other hand, authorities can make significant decisions based on the data received from the accounts team.
In the concluding line, we would like to present our experiences before you. We have seen that numerous business owners still don’t have any type of financial transaction and accounting patronage. So, to maintain the market position, owners are required to know all about the verticals and products of their business. If your business also comes under this category that doesn’t have any bookkeeping services and is looking for small business bookkeeping services, we have covered you.
As an award-winning organization with 20 years of expertise in the field, HRMB Associates LLC will assist you throughout your entire business’s financial transaction and accounting necessities. With our top bookkeeping service and complete assistance, you and your company will touch the heights of success. We have our experts’ team stand by there for you 24/7 with truly customized services.