What is accounting?
Systematic recording, measuring, and communicating of data pertaining to financial transactions in an organization. It is referred to as the business language. Accounting attempts to provide users of financial statement with a clear image of the financial statements.
What is included in the accounting process?
- Examining an organization’s financial statements
- Getting ready to make adjustments
- Examining operational costs
- Creating budgets
- Financial forecasting
- Finishing income tax returns
- Helping organization in evaluating the impact of financial decisions
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What is bookkeeping?
Systematic process of maintaining, recording, and categorizing all of an organization’s financial transactions with the goal of preserving an accurate record of the transactions. Using this data, organizations decide on significant investments.
What is included in the bookkeeping process?
- Recognizing and documenting a financial transaction
- Handling invoices
- Setting up ledger accounts for each financial transaction
- Using the ledger account balances to prepare a trial balance
Accounting and Bookkeeping services
The following list summarizes the main distinctions between the two:-
Definition
Process of summarizing, interpreting, categorizing, and conveying financial transactions of an organization in order to give relevant financial data is known as accounting.
We define bookkeeping as only recognizing and documenting financial transactions. It is either manually or automatically possible.
Stage
Where bookkeeping ends, accounting begins.
Bookkeeping is the initial stage and is the foundation of accounting.
Goal
Establishing the financial situation of the organization and communicating that information to the stakeholders are the goals of accounting. Therefore, it involves more than merely keeping a record of transactions.
Maintaining systematic and accurate records of the organization’s financial transactions are the objectives of bookkeeping.
Financial statement preparation
The preparation and presentation of financial statements is accountant’s main duty. The organizations utilize the financial data and provides it to the clients.
A bookkeeper is not in charge of preparing the financial statements and can be asked to investigate the company’s core sources of revenue and expense and report those findings to management for evaluation.
Decision making
An accountant offers a thorough analysis of an organization’s financial situation. Management can therefore rely on accounting to help them make important decisions.
Since the information generated by a bookkeeper is too basic to support management decisions, management cannot make decisions based on bookkeeping.
Skills essential
To learn and analyze accounting concepts, advanced learning is required.
The activities involved in bookkeeping call for mechanical skills.
Parties involved
An accountant is a person who deals in accounting.
A bookkeeper is a person who performs bookkeeping tasks.
Analysis
In order to deliver in-depth information, accounting is concerned with data analysis and business insight creation.
Analysis is not required for bookkeeping (exceptions exist)
Types
Financial accounting, Cost accounting, Tax accounting, Forensic accounting, public accounting, Government accounting, etc., are the most common types of accounting.
Single-entry and double-entry bookkeeping are the two types of bookkeeping in accounting.
Conclusion
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