What You Should Know About Businesses This Year

Similarities and Differences between Accounting and Bookkeeping Many a times, bookkeeping is mistaken for accounting. Accounting is the systematic means of identifying, maintaining documents, classification, assessing and communicating financial information over a given amount of time so as to understand the losses and gains of a company whereas book keeping is a part of the procedure in accounting through record of financial transactions. Book keeping provides information essential for preparation of accounts. The two processes have their similarities and differences as outlined below. Similarities Records
Learning The Secrets About Accounting
In both accounting and book keeping, records are extremely important. Book keeping requires daily noting down for easy accessibility when it comes to preparing accounts and accounting requires the records for preparation and analyzing of financial statements.
Learning The Secrets About Accounting
Classification From the daily transaction records, they are classified into various books i.e. bank book that is used to document the deposits and withdrawals made, buy book for the records of all purchases made on credit, money book used for the purpose of documenting all cash payments such as trade payables like trade payables and petty cash purchases and money receipts like trade receivables and cash sales and finally the earnings book by which non-cash earnings are recorded together with customer’s key details and afterwards transferred into the client’s account. Differences Tools utilized Accounting uses this income statement, balance sheets and even cash flow statements because its main tools while in publication keeping journals and ledgers are used. Financial statement preparation While book keeping does not require any preparation of financial statements, accounting is mainly the preparation of those financial statements such as balance sheets, profit and loss statement and cash flow statements. Management role The management is not involved in book keeping but they have a special interest in accounting records because it is useful in checking on the performance of an organization and making of future decisions based on that information. Decision making Whereas information provided by book keepers cannot be Solely used to make decisions, accounting data plays a significant part in making decision making in a company. Job role Publication keeper’s roles are largely to collect, document and Classify information relating to monetary transactions while accounting requires more skilled employees to translate and convey the consequences for decision making. Skills needed Accounting is a bit complicated hence it requires special skills while on the other hand bookkeeping does not demand any specific skills because of its simple nature. Categories Accounting is categorized into cost, management and financial Accounting among other classes while reserve keeping is categorized into single entry and double entry. Lots of people tend to confuse book keeping and accounting to be the exact same thing. However, as we have seen in this paper that the two procedures Share some common characteristics and also have their differences which differentiate One from the other.