05
Jul 2021
Bookkeeping and accounting may, in general, look like the same professions to a layperson. The reason is that both the accounting and bookkeeping professions deal with the same financial data, professionals require basic accounting knowledge, and it involves generating reports based on the financial transactions.
In actuality, the information a bookkeeper is responsible for gathering and recording affects the accountant's interpretation of the company's financial data. Based on this information on recorded and organized documents by the bookkeeper, the accountant provides necessary recommendations to the company's owners about investing, tax issues or other financial matters.
Accounting
The accounting process is responsible for interpreting, sorting, analyzing, reporting, and summarizing the available financial data in an organization. Accounting provides a clear picture of the company's financial position to company management and other stakeholders. The main objective of the accounting department is the financial situation of the business and further communicate the findings to the relevant authorities.
Accountants with relevant experience and educational qualifications can obtain Certified Public Accountant (CPA) license. Certified accountants are responsible for measuring, analyzing and communicating all information regarding the financial transactions taking place in a business. Account statements provide a clear view of the company's financial standing to its stakeholders, which includes investors, creditors, management, employees, and government authorities.
Responsibilities of an Accountant
- Evaluating Business Performance
- Financial Data Management
- Financial Data Analysis and Related Consultation
- Financial Report Preparation
- Regulatory Compliance
Bookkeeping
The bookkeeping process is responsible for organizing and recording of financial transactions of a company. The main focus of the bookkeeping function is to ensure an accurate record of all the monetary transactions of a business are organized and maintained with easy access when required. Furthermore, companies use these records to undertake significant investments. Therefore, the objective of the Bookkeeping department is to maintain the records of all financial transactions systematically and adequately.
Bookkeepers are responsible for this exercise and need to be very accurate in the task and knowledgeable about the financial subject. An accountant generally oversees a bookkeeper's work. The functions of Bookkeepers include: Maintaining credit and debit accounts, including sorting based on expense categories. Verifying the accuracy of the records & accounts balance and handling all bank related activities, including the bank deposits.
The bookkeeping process consists of the following steps:
- Identifying a genuine financial transaction
- Recording the financial transaction
- Updating the ledger account
- Preparing the trial balance sheet
- Organizing transaction source documents like invoices
Difference between Accounting and Bookkeeping
The following table gives some of the main differences between accounting and bookkeeping:
|
|
Accounting |
Bookkeeping |
|
Function |
Accounting relates to summarising, analyzing and reporting financial transactions of the company. |
Bookkeeping relates to identifying, sorting and recording financial transactions of the company.
|
|
Financial Statements |
Preparing financial statements is part of the accounting process. |
Preparing financial statements is not part of the accounting process. |
|
Skillset |
Accounting requires a specific skill set due to its analytical nature which could be complex. |
Bookkeeping does not require any specific skillset as it doesn’t involve analysis. |
|
Decision Making |
Company management can take decisions based on the data from accounting. |
Company management cannot take decisions based on the data from bookkeeping. |
|
Branches |
Accounting has internal branches such as management accounting, cost accounting etc. |
Bookkeeping doesn’t have any such branches. |
|
Financial Standing |
Accounting indicates the financial standing of a company. |
Bookkeeping doesn’t indicate the financial standing of a company. |
|
Person Incharge |
The person responsible for accounting functions is referred to as an Accountant. |
The person responsible for bookkeeping functions is referred to as a Bookkeeper. |
Accounting vs. Bookkeeping
These are some of the basic differences between Accounting and Bookkeeping. This shows us that there are many differences between the two, even though both the processes are related. We can say that bookkeeping is a part of the accounting process, whereas accounting is a separate financial process that is to be performed by all businesses.
Why Us?
Jaxa Chartered Accountants are one of the well-known accounting firms in the UAE. Our consultants are subject matter experts on financial related topics, including bookkeeping services, accounting services and audit services. Our years of experience have helped us to guide and serve many companies in the UAE. We closely work with our clients in monitoring and guiding them with all the regulatory changes in the country. Please Contact Us for all the financial enquiries. We'd be happy to serve you!