Basics of Bookkeeping and Accounting
Bookkeeping refers to the act of recording of financial transactions and events. Transactions include sales, purchases, income, and payments by individuals of the organization.
- This is usually performed by a bookkeeper.
- It should not be confused with accounting.
- The accounting process is usually performed by an accountant.
The accountant creates reports from the financial transactions recorded by the bookkeepers and files form with government agencies.
There are some common methods of bookkeeping such as the single-entry bookkeeping systems and the Double-entry systems. But while these systems may be seen as “real” , any process that involves the recording of financial transactions is a bookkeeping process.
Differentiate between Bookkeeping and accounting
- It involves the recording of transactions but accounting is the science of recording, classification analysis and summarizing business transactions, and interpretation the different results.
- A bookkeeper always works under the head accountant and is often referred to as an account assistant.
- Calculation of tax and filing of tax returns is a part of the duties of an accountant. But he can take help from book keeper for tracking the total of the income of the business.
- It is just like machine work in which the bookkeeper passes the vouchers into books but accounting work is fully professional and needs high experience for analysis and interpretation of financial statements.
