Bookkeeping is simply another word for accounting, right? Wrong. Plenty of individuals think these two roles are the identical, however, the term bookkeeping refers to recording financial transactions and activities on a routine. It’s a subset of accounting which needs the subsequent jobs to be wiped out order to create a financially stable business: Recording financial transactions.
• Posting debits and credits.
• Producing invoices.
• Maintaining and balancing current accounts, historical accounts and general ledgers.
• Completing payroll.
One of the most components of bookkeeping is managing a ledger. This can be the first document where bookkeepers keep all their records, expenses and receipts. Recording on the ledger is understood as posting. So, the more times there’s a procurement or spend, the more often the ledger are going to be posted.
The term accounting covers a far broader scope than bookkeeping. The entire topic area will be classed as accounting, whereas bookkeeping is just an element of the system that uses aspects of accounting within its practices. Accounting gives you the info your business must make better decisions. Not only does it cover this, but accounting also reviews financial reporting and performance, then reports back to the relevant people with this information. Business owners, shareholders, investors and plenty of others rely upon these financial reports for updates on its performance and overall success.
Accounting is especially made up of:
• Recording expenses.
• Preparing company-wide financial statements.
• Analyzing the prices of operations.
• Completing tax returns.
• Helping the business owner in understanding the impact of economic decisions.