Bookkeepers are collecting, sorting and recording all of the financial transactions of a business, such us all the sales and all the expenses occurred by the business on a daily basis. At the end of each accounting period such as a month, quarter or a year, prepares an adjusted trial balance. Ensures that the general ledger balances, which means total debits equal total credits. If they don’t balance the bookkeeper needs to find out why and make the appropriate corrections.
Accountants are identifying, measuring and communicating economic information to permit informed judgments and decisions.
Accounting begins before bookkeeping starts and continues after it ends. Bookkeeping is part of the accounting. The accountant assesses the nature of the business from a financial perspective; then designs an appropriate accounting system for the bookkeeper to use; sets up a general journal where the bookkeeper will record transactions in the order they occur; sets up a chart of accounts and a general ledger; develops rules and procedures to guide and to provide direction to the bookkeeper as needed.
After the bookkeeper is done with the bookkeeping the accountant takes over and puts the data collected and recorded into a form of information that can be used to make important business decisions. He’ll use the data from the general ledger to create financial statements for the business, including a balance sheet, income statement and cash flow statement. These financial statements can be used to help the shareholders to figure out where it’s spending money, where it’s making money and the overall financial health of the company. He’ll also use the information for tax preparation and tax planning. He’ll look for allowable deductions and designs a strategy to reduce the tax obligation within the bounds of the law.
Summarized: bookkeeping is part of the overall accounting process and involves the collection and entry of data of financial transactions from source documents.
Accounting involves designing and setting up an accounting system including the development of a chart of accounts and a set of rules and procedures to follow when collecting, sorting and entering data.
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