How Bookkeeping Is Different From Accounting

Accounting And Bookkeeping

There are many differences between accounting and bookkeeping. One of the major differences is in the way that the latter is carried out. Accounting firms do not usually carry out the bookkeeping job themselves. They outsource the job to some third party company or individual.

The concept of bookkeeping has changed over the years. Previously, bookkeeping was done manually using a lead pencil and micro registers. The advent of computerization and automation made it possible for bookkeepers to create accounting reports online. In this era of computers and software, bookkeepers have become part of the information management team of any organization. Most bookkeeping firms today employ a team of bookkeepers to maintain the books.

Practice Of Bookkeeping

The practice of bookkeeping is not as simple today as it used to be. The advent of online accounting has simplified the task and eliminated much of the manual labor associated with bookkeeping. Online bookkeepers not only do the accounting but also prepare reports to be sent to upper management. Some firms even hire online bookkeepers  to manage the transactions and make reports.

Bookkeeping is one of the most important aspects of any business. It involves the recording of financial transactions of a company or an organization. The record of these transactions is then processed by the accounting firms. Most bookkeeping firms have their own websites which provide a lot of information about them and their services to help their clients in deciding which firm would be the best to handle their financial transactions for them.

Many Accounting Firms 

Many accounting firms use the service of bookkeepers who work under their supervision. This gives them access to all the records of a company and the activities carried on in them. There are many differences between bookkeeping that can be easily seen when one looks at the price charged by bookkeepers to various clients. Smaller bookkeeping firms use staff that are not authorized to enter the inner workings of a company’s bookkeeping.

The main difference between accounting and bookkeeping is that bookkeepers create statements which represent the business’s financial condition. These statements are then given to stakeholders (customers, auditors, shareholders etc) who review them periodically. The auditors check these statements against the bookkeeping records that they have reviewed and identify possible discrepancies. If there are any, they usually request the company to bring their practices up to standards, initiate remedial measures and pay penalties for negligence.

Financial Reports

As mentioned earlier, bookkeepers do not actually produce financial reports; they create interpretations of the financial records. The procedures followed by bookkeepers will vary depending on their level of education and experience. The most highly trained bookkeepers will prepare a balance sheet from entries made in the books. Other than producing reports, bookkeepers also create charts or graphs showing the results of certain transactions or years. How bookkeeping is different from accounting is that the auditors will verify the facts reflected in the balance sheets before issuing their reports.

It is natural to compare bookkeeping with accounting because both involve the recording of financial transactions. However, the practices followed in accounting are guided by federal, provincial and territorial laws while bookkeeping practices are guided by the practitioners themselves. The two practices are different only in terms of scope. In essence, they have the same objective – to record the financial transactions that occur within a business. Their differences lie in the implementation of their techniques and their methods of recording the information. It is these differences that make accounting and bookkeeping different.

Bookkeeping Is Different From Accounting

When comparing how bookkeeping is different from accounting, it is important to note that there are some similarities between the two. Both employ various forms of accounting ledgers and journals as well as journals for reporting transactions. They both record the financial transactions (money movements, sales, purchases and income) and produce reports based on those transactions. They are similar in the fact that the bookkeepers create reports that help the management to understand the performance of the business.

As far as the scope of bookkeeping is concerned, the scope of bookkeeping is very broad. This means that not only does accounting involve the recording of financial transactions but also includes the preparation and submission of reports to the various stakeholders. The scope of bookkeeping is quite broad in comparison with accounting since the scope of bookkeeping involves not only the preparation of reports but also the identification and recording of all the transactions that take place in the business.

Conclusion

It is evident that the two disciplines are quite different and both require different skill sets, knowledge sets and of course time frames. The difference between how bookkeeping is different from accounting pertains to the time frame required to achieve the objectives of the organization. Bookkeeping requires that all the records are maintained at the end of each month, quarter or year and accounting on the other hand focuses more on the reporting of the financial transactions. Since accounting involves the generation of reports after the transaction has taken place, it is evident that accounting takes longer time to accomplish than bookkeeping.