BOOKKEEPING VS ACCOUNTING, BOOKKEEPER VS ACCOUNTANT

Post a Comment

Bookkeeping and accounting are seemingly related but have clear differences which we will discuss in this post.

Bookkeeping is the systematic process of identifying and recording the financial transaction of a business.

It is the day-to-day activity of recording the financial transaction of a company.

On the other hand, accounting is an information system that identifies, records, summarizes, presents and communicates relevant, comparable and reliable financial information for users to make informed economic decisions.

One of the differences between bookkeeping and accounting is that the former records data while the latter interprets.

Accounting only begins when bookkeeping ends.

Key Differences Between Bookkeeping And Accounting

The difference between bookkeeping and accounting are as follows:

 1. Bookkeeping is the daily recording of financial transactions, whether electronically or manually.

On the other hand, accounting is the process of identifying, recording, summarizing and communicating financial information to users.

2. The main purpose of bookkeeping is to maintain a systematic and complete record of all financial transactions whereas the main purpose of accounting is to identify, record and communicate financial transactions to users and help them make informed and sound economic decisions.

3. Accounting is a superset of bookkeeping because it goes beyond simply recording business transactions to interpret and communicate financial information.

Bookkeeping is merely a subset of accounting in that its activities are included in the accounting activities.

To put it another way, the scope of bookkeeping is smaller than that of accounting, while the scope of accounting is larger than that of bookkeeping.

4. The information produced by bookkeeping is only used by mostly internal users, whereas the information produced by accounting is used by internal and external users.

5. Bookkeeping is a clerical activity in that it involves recording and working with records of business transactions.

In contrast, accounting is an analytical activity because it involves analyzing and interpreting financial information for users of accounting information.

6. While accounting is normally handled by the senior employees of an organization, bookkeeping is typically handled by the junior employees.

7. Bookkeeping is not dependent on accounting because it comes before accounting.

In contrast, accounting is highly dependent on bookkeeping because it comes after bookkeeping.

Therefore, any mistake in the bookkeeping procedure could lead to incorrect accounting.

8. Bookkeeping can be divided into two types, namely; single-entry bookkeeping and double-entry bookkeeping.

On the other hand, accounting can be divided into different branches, including financial accounting, management accounting, cost accounting, forensic accounting, tax accounting and public accounting.

9. While bookkeeping introduces accounting, accounting provides an overview of bookkeeping activities.

10. A person who handles bookkeeping is referred to as a bookkeeper, and a person who handles accounting is referred to as an accountant.

This brings us to the next heading.

RELATED POST: IS ACCOUNTING AN ART OR SCIENCE

Bookkeeper vs Accountant

A bookkeeper is a person who is in charge of maintaining daily records of business transaction.

A bookkeeper's job is to document the day-to-day transactions of the Business.

Everything a bookkeeper does, an accountant also does. Additionally, an accountant measures, compiles, analyzes, and conveys financial information to economic users.

Beyond bookkeeping, an accountant can perform financial transaction analysis to create financial statements and file tax filings.

RELATED POST: TRADITIONAL CLASSIFICATION OF ACCOUNTS

Differences Between A Bookkeeper And An Accountant

1. While an accountant develops and presents the financial statement of an organization, a bookkeeper does the bulk of the data gathering and input into the bookkeeping system of an organization

2. Although advanced education and training are not often required for bookkeepers, rigorous and advanced training is required for accountants.

3. Since the bookkeeper's data is typically not presented in a summarized and understandable manner, it is insufficient for decision-making.

In contrast, data provided by accountants is not sufficient for making decisions since the data are usually presented in a summarized and interpretable format.

4. Financial statements are generally not provided by bookkeepers. The creation of a trial balance typically marks the completion of bookkeeping tasks.

On the other hand, creating financial statements is among the most important duties of an accountant.

In general, accountants prepare financial statements so that both internal and external users of a business can use them to make sound financial decisions.

5. Accountants shows the net result of an organization for a specific period, as opposed to bookkeepers who do not.

6. Due to his lack of advanced training and expertise in the fundamentals of accounting, a bookkeeper is incapable of doing an audit.

In contrast, an accountant can be qualified to conduct an audit because he has received advanced training and education in the fundamentals of accounting.

7. A bookkeeper keeps track of and manages all business transactions like purchases, sales, and cash receipts, to mention a few, for an organization.

On the other hand, beyond what a bookkeeper do, an accountant prepares adjusted trial balance, publishes financial statements, and submits tax returns.

Before you go, just a quick reminder that the main distinction between bookkeeping and accounting is that the former focuses on the recording of business transactions, while the latter goes beyond bookkeeping to include summarizing and interpreting financial reports for those who will be using accounting information.

You should also be aware that a bookkeeper handles bookkeeping duties, whereas an accountant handles accounting duties.financial statements

Help us grow our readership by sharing this post

Related Posts

Post a Comment

Subscribe Our Newsletter