How Accounting is Different from Bookkeeping?

Nowadays everybody needs an accountant whether it's an individual or a business. Where to spend? How to spend? When to spend? Should we need to save some money or Should we need to invest? All these questions are arising when we don't have an accountant. Accountants play a very big role in a business right now. A business owner or an individual both appoint an accountant to manage their day to day expenses. Bookkeeping is initially done when there is no accounting system. Before accounting, we are working manually which means we have to write our data in the books of accounts that means we have to do bookkeeping. Bookkeeping is a part of Accounting and accounting is huge concept which we'll discuss.

Now Let's talk about Bookkeeping,

WHAT IS BOOKKEEPING AND HOW IT WORKS?

Bookkeeping is the recording of the financial transaction and also is a part of the process of accounting in business. Mainly the transaction including purchase, Sales, Receipts, and payments by an individual person or an organization has been recorded in this. Bookkeeping is the work of a bookkeeper who records the day to day transaction of the business activity. A Bookkeeper usually writes the daybooks which contain all records of sale purchase receipt payments and documents of each financial transaction whether it cash or credit from the business. The most important bookkeeping focus is to maintain an accurate record of all the monetary transactions of a business. So that the companies use this information to take major investment decisions in the future.

Next is Accounting

WHAT IS ACCOUNTING?

Accounting is an art of recording summarizing and classifying the accounting data for systematic records which plays a vital role in running a business because it helps you track income and expenditures, ensure statutory compliance, and provide investors, management, and government with quantitative financial information which can be used in making business decisions. An accountant can create financial reports from the information recorded by the bookkeeper. The main purpose of accounting is to provide a clear view of financial statements to its users, which includes investors, creditors, employees, and the government.

The Differentiation between Accounting and Bookkeeping:

Persons Involved: In bookkeeping, there is only one person which is a bookkeeper is involved in the whole situation wherein accounting there could be many accountants who is dealing with

Preparation of Financial Statement: In the case of bookkeeping financial statements should not be made but in the case of accounting financial statements are a part of the accounting process.

Decision making: Data provided after doing bookkeeping is not enough for taking any decision. But in accounting management can make decisions based on the data obtained from the accounting process.

Analysis: There is no analysis required in the bookkeeping process. In accounting analyses, the data can create insight for the business.

Relation: Bookkeeping is this basis for accounting. Accounting begins where bookkeeping ends.

Nature of job: Bookkeeping is daily routine work. And accounting is analytical and dynamic in work.

Objective: The objective of bookkeeping is to maintain systematic records of financial transactions and prepare original books of accounts. The objective of accounting is to ascertain the net results of operations and financial position and to communicate information to interested parties.

Skills required: Bookkeeping doesn't require any special skill sets. Where in accounting it requires special skills due to its analytical and complex nature.   

Users in business: Only internal users like Owners, managers, and employees can use bookkeeping. On the other hand, accounting has both internal and external users who can work easily.

Now we'll talk about the duties of the accountant and a bookkeeper.

Accountant duties

* Preparing and adjusting the entries of the common.

* Tax strategy and tax planning.

* Comparing Income tax return.

* Organising budget.

* Auditing.

* Analysing business performance.

Bookkeeping Duties

* Managing the accounts receivable and accounts payable.

* Processing and maintaining a payroll system.

* Posting journal entries.

* Providing basic tax advice.

* Recording the business regarding.

* Recording receipts, payments and other financial transactions.

* Chasing customers for their pending payments.

* Processing the invoices.

Obviously, the roles of an accountant and the bookkeepers vary from the (B2B) Business to Business. However, Now you know that they're actually quite different from each other.