If you have been introduced to commerce in your school grades, you will be quite familiar with the terms’ bookkeeper and accountant. Many who wish to pursue commerce in their higher education may envision being a bookkeeper or an accountant as their career goal.
However, those not bred in a commerce background might think that the functions of the bookkeeper and the account are very similar. They may even believe they are the same person. However, that is not the case, and we will give you a few solid reasons to differentiate between the bookkeeper and the accountant.
A Brief Idea Of Bookkeeping And Accounting
Bookkeeping is simply stating facts about the business transactions and recording the instance as it happens. To interpret, it is the bookkeeper’s job to collect all the evidence and record it in the firm’s accounting books, accounting for all expenses and incomes and a timeframe for every little transactional and cordial detail.
On the other hand, accounting is more insightful. The accountant will analyse all the records the bookkeeper or another accounting system reports. The accountant will be responsible for all the financial matters decisions. As you can figure, a few functional differences come with their individual purposes. We will be talking about that in the next part of the article.
The Key Differences To Determine Bookkeeping and Accounting
certain things can make you differentiate between bookkeeping and accounting more confidently. Due to the similarities in the goal and dabbling with financial business matters, they are often confused as the same. Here are a few differences in knowing exactly the functions of accounting and bookkeeping.
|In the case of accounting the entries are already made and all the accountant is required to do is adjust them to get an insight.
|Bookkeeping just records the entries. It categorizes all daily transactions into payments and expenses.
|The accountant has thoroughly studied the records to analyze the cost of operations and make further decisions.
|The bookkeeper’s job is to record stuff. They will be responsible for sending invoices to customers and recording payments when received.
|As accountants tend to gather enough information, they will be able to see certain things differently and analyze them to provide solutions. They can also help business owners take financial decisions.
|On the other hand, bookkeepers are only advised to do bank reconciliations every month.
|Every financial statement of the company will be reviewed and analyzed by the accountant before it is used in any official matters such as tax filing.
|The bookkeeper’s only duty is to produce the financial report, once a month. They will just place the facts, they are not asked to analyze or adust it anyway.
|The accountant will use their newfound insight to assess the financial health of the business.As they go through the previous records they can form an idea of how the business performence has been all the year. Based on this, they can predict the instances further into the future, allowing the company to make informed decisions.
|While the bookkeeper is only required for processing the payroll, nothing more intuitive.
|The accountant is also asked to perform audits and present a financial understanding of the comapny performence.
|The bookkeeper is tasked with preparing the accounting books without any errors. These error-free records are then used by accountants to gain the required insight for helping owners make further financial decisions.
|All the accounting records and insights are used in filing tax returns, conducting tax planning and providing genuine advice on taxes.
|The bookkeepers create the year-end financial statements. They also must present all the tax documents correctly. Accountants further analyse the statements and documents to derive financial predictions.
Bookkeeping and accounting may be similar in business transactions and finances. However, these two entities have functional differences. The bookkeeper does the initial job of setting up the books, but they are not responsible for analysing or making decisions. The accountant is required for the second part of the matter. As a final result, you not only get a financial statement, but you can also form an idea of how to proceed in the future.