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Points of Differences Between Accounting and Bookkeeping

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Points of Differences Between Accounting and Bookkeeping

Bookkeeping refers to the orderly method of recording and organizing the financial transactions of the company or that particular business organization. Books in an organization are maintained on a daily basis. Each and every transaction of the business organization is recorded and a track is kept in the books. Hence, there are chances of the data being accurate and exact.

Accounting refers to the process of recording financial transactions in an efficient and comprehensive manner. The accounting process involves the summarizing, analyzing and reporting of the financial transactions. For every business, accounting is the key function. Without the maintenance of the accounts, a business organization is unable to know about its performance in the market.

Related article: Accounting is called “Business Language”- Why?

Here are the points of differences between the bookkeeping and accounting

Points of the difference

Bookkeeping

Accounting

Initial point

In order to maintain the books, there is a need of the raw data of the business from various sources- bank statements, register of in and outflow of cash, entries recorded by the warehouse person, records related to the purchasing done and the sales and other information with regard to the business.

For the accountant to maintain the accounts, there is a need for the data that is maintained by the bookkeeper, related to the basic entries. Further, the accountant has to club these entries, analyze and record it in an organized manner.

Skills required

A bookkeeper who is responsible for carrying out the process of bookkeeping, needs to have the basic knowledge about the journal entries and the ledger accounts, as the posting of the entries according to the transactions needs to be done. Proper effect of the double entry system must be known to the bookkeeper.

The skills that must be known to the accountants are as follows. They must be aware of the skills to analyze the data in a consistent way, the skill of making the correct decisions as and when required by the business. Managing the loss of the business is one of the major skills that an accountant should be known to.

Day-to-day routine activities

Some of the activities that must be performed by a bookkeeper are:

·         Passing the journal entries.

·         Merging the ledgers and the other documents.

·         Communicate with the different teams in order to know about the input.

Activities performed by the accountant are:

·         Revising or performing an audit of the books of the accounts maintained by the bookkeeper.

·         Preparing the financial reports for that particular business organization.

·         Preparing appropriate budgets and suitable models in order to help the business management.

Level of responsibilities

The bookkeeper of the organization is considered to be a part of the low or middle level management of that particular organization. the primary objective of the bookkeeper is to keep a proper track of all the transactions that are carried out in an organization.

The accountant is a part of the middle level of the management of the business, that is responsible for presenting the and reflecting the real and true vision of the financial position of the business organization to the people to are interested in.

Computer knowledge

A bookkeeper makes use of the accounting ERP. Besides this, basics of MS- Excel should be known to a bookkeeper.

Advanced knowledge of the MS-Excel, MS-PowerPoint, accounting ERP is used by the accountants.

These are the points of differences between the bookkeeper and the accounting. Both, are equally important and go hand in hand. there would be no use of the accountants performing their jobs if the bookkeeper has not done the correct posting of the entries.

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