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How Accountant Differs from Bookkeeper?
In the business world, bookkeeping and accounting both the terms are used interchangeably, but the fact is bookkeeping is the stepping stone of accounting. However, defining these two terms has always been tough, but both have important differences from each other.
Many businesses, who lack knowledge in accounting find bookkeepers and accountants one and the same as they both deal with financial matters. Whilst, both these processes are fundamentally different and have their own crucial roles to play in every business organization.
So let’s discuss the role of accountants and bookkeepers to understand the major differences between bookkeeping and accounting:
What do we understand from bookkeeping and accounting?
In simple terms, bookkeeping is the recording of transactions on a daily, weekly or monthly basis that is held in the business firms, for example, payments and receipts, exchange of bills, etc. Whereas the term accounting is referred to summarizing all the transactions, which are helpful to analyze the financial position of the company, this 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 account, etc.
How important are bookkeepers and accountants for businesses?
Bookkeepers and accountants play a key role in every industry. When we talk about bookkeepers, they are few people who look after the recording of the transaction with basic knowledge of accounting and make use of latest accounting software such as QuickBooks, NetSuite, Quicken, Sage, Xero etc.
And 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 of them are wholly responsible for managing the financial workflow of the business.
How bookkeepers and accountants help the business firms to make informed decisions?
The top-level management always takes interest in the tasks performed by the accountant, rather than the bookkeepers. Accounting is complex in nature as it is evolved with various risks, so it needs special concern and 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 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 very 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 the operations at reasonable prices.
Get in touch with Cogneesol- a leading accounting service provider serving various business industry, since 2008.
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