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How Accountant Differs from Bookkeeper?
In the business world, bookkeeping and accounting both the terms are both used interchangeably. However, accountant vs bookkeeper are two different roles. Bookkeeping is the stepping stone of accounting. However, defining these two terms has always been tough, but both have important differences from each other.
Business owners with a lack of knowledge find bookkeepers and accountants one and the same. Whilst, both these processes are fundamentally different and have their own crucial roles to play in every business organization.
Accountant Vs Bookkeeper: What Sets Them Apart
What do we understand from bookkeeping and accounting?
In simple terms, bookkeeping is the recording of transactions on a daily, weekly, or monthly basis. It includes payments and receipts, exchange of bills, etc. In contrast, the term accounting refers to summarizing all the transactions helpful to analyze the financial position of the company. It includes profit and loss statements, balance sheets, etc.
In a nutshell, we can say that bookkeeping is a subset of accounting and accounting is the language of any business and they both work simultaneously.
What is the job responsibility of an accountant and bookkeeper?
Bookkeepers are mainly hired to manage the process of identifying, recording, and classifying the financial transactions in the business organization. It is the base for performing accounting procedures. Accountants are responsible for summarizing, interpreting, and communicating the latest financial position of the company on the basis of transactions recorded in the bookkeeping process that helps the Board of Directors to take any financial decision that is beneficial for their firm.
Bookkeepers usually maintain the records in the general ledger, whereas accounting is vast, it is maintained in different accounts such as balance sheets, profit and loss statements, trading accounts, etc.
How important are accountants and bookkeepers for businesses?
Accountants and bookkeepers play a key role in every industry. When we talk about bookkeepers, they are a few people who look after the recording of the transaction with basic knowledge of accounting and make use of the latest accounting software such as QuickBooks, NetSuite, Quicken, Sage, Xero, etc.
When it comes to accountants, they are certified people with some professional degree in accountancy. The financial statement is prepared by accountants, not the bookkeepers, they don’t have any role in preparing the statements neither they are authorized to do so. Both are wholly responsible for managing the financial workflow of the business.
How do bookkeepers and accountants help business firms to make informed decisions?
The top-level management always takes an interest in the tasks performed by the accountant, rather than the bookkeepers. Accounting is complex in nature as it has evolved with various risks, so it needs special concern and the help of skilled professionals.
In simple terms, accounting is the only way to analyze the financial position of the company, and it is only possible with the help of accountants. When it comes to making an informed decision for the firm or if there is an amendment to the policy or a new policy is going to be introduced, every strategy is planned on the basis of financial reports.
With the advent of new technology, managing books has become much easier. However, businesses still prefer cost-effective ways to streamline the process, and outsourcing accounting services is an ideal solution. These outsourcing companies make use of the latest accounting software for managing operations at reasonable prices.
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