Updated: Aug 20, 2021
For every business or an organization, bookkeeping and accounting are extremely important functions. In simple terms, bookkeeping is subject to record of all the financial transactions while accounting is subject to interpret, classify, analyze, report, and compile the financial data.
Although bookkeeping and accounting might seems like the same service in an untrained employee's eye because they both deal with some similarities like requirements of basic accounting knowledge, dealing with the financial data, and classify and create reports by using financial transactions. As much as these processes are similar to each other they are inherently different and have some of their own advantages.
What is Bookkeeping?
A person who can record the financial data of a business accurately is a bookkeeper. The main goal is to ensure that every single entry recorded daily is accurate while keeping a record of all the transactions in the books.
A bookkeeper can record and evaluate the income and expenditure, create sales invoices and increase purchase invoices, and make bank transactions by doing this.
Bookkeepers also need to verify that the accounts of a business are balanced. They have vast knowledge and skills and can explain crucial financial information to the owners of businesses and makes reports based on the information they have.
Bookkeepers have some other responsibilities too that include analyzing the reports and debtor reports, creating and updating day-books, and providing the information in a report format. Outsourced Bookkeeping Services India gives you an opportunity to set up an virtual office in India and save at least 50% cost.
What is Accounting?
On the other hand, accountants have the responsibility to generally manage the accounts and produce the financial statements and tax returns that comply with the law.
Accountants are required to have expert knowledge in ethical issues and financial laws. An accountant role needs to have an understanding of data and the ability to provide financial advice that can affect a business.
Accountants are of different types. Some of them work for public accounting firms. They handle various businesses on the other hand others might focus on just one. At last, the accountant will be arranging the entries created by the bookkeepers when each financial period ends. This is done by making created journal entries and producing the documents such as balance sheet reports or profit and loss.
When evaluating the findings is done, accountants help the businesses to make an informed decision. Virtual accountants offer outsourced services for small businesses, which help them to grow as faster. Outsourced Accounting Services India provides affordable and efficient account solutions for businesses which helps in double the productivity.
Difference Between Bookkeeping and Accounting
The below-listed points are important concerning the difference between bookkeeping and accounting-
• A bookkeeper keeps the proper records of all the financial transactions. Accounting is meant to record, measure, group, summarize, evaluate, and report the transactions of the entity given in financial terms.
• Financial Statements come under a part of the accounting process and not under the bookkeeping process.
• Bookkeeping is the first step for accounting.
• Accounting records are considered as a groundwork for taking managerial decisions whereas, in bookkeeping records, decision making is difficult.
• A bookkeeper performs the task of bookkeeping on the other hand accounting is performed by an accountant.
• Bookkeeping does not reveal an accurate financial position. However, purpose accounting shows the fair and square view of the profits and the financial status of an organization.