Bookkeeping and Accounting define each other

Bookkeeping and accounting is both relevant tool in communicating the financial activity, performance and condition of a business entity.  The important role of bookkeeping and accounting in every business has increased the demand for bookkeeping and accounting job or services worldwide. Because of the high demand, it made bookkeeping and accounting as two of the most profitable and rewarding profession in the world.VS

A bookkeeper (or book-keeper), sometimes called an account clerk, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing up the “daybooks.” The daybooks consist of purchase, sales, receipts and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct daybook, supplier’s ledger, customer ledger and general ledger. The bookkeeper brings the books to the trial balance stage. An accountant may prepare the profit and loss statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.

Accounting is a challenging, good-paying professional nowadays, as businesses and investing have become increasingly complex. I still think that you should be a good bookkeeper before you can be a good accountant, because I’m sort of old fashioned, and I believe in mastering the fundamentals and starting at the bottom and working your way up by proving your skills and performance, rather than, say, you intra-office social skills or some handful of working experience in auditing.

I think being a bookkeeper is a great job, even though I am qualified Chartered Accountant. I, like I said, was, and still am, a bookkeeper, and enjoy it. What is more important is the quality of your service/work not necessarily what you call it.  I’m sure others may have different definitions.

Definition of bookkeeping

Bookkeeping is an indispensable subset of accounting. Bookkeeping refers to the process of accumulating, organizing, storing, and accessing the financial information base of an entity, which is needed for two basic purposes:

  • Facilitating the day-to-day operations of the entity
  • Preparing financial statements, tax returns, and internal reports to managers

Bookkeeping (also called record keeping) can be thought of as the financial information infrastructure of an entity. The financial information base should be complete, accurate, and timely. Every record keeping system needs quality controls built into it, which are called internal controls.

Definition of accounting

The term accounting is much broader; going into the realm of designing the bookkeeping system, establishing controls to make sure the system is working well, and analyzing and verifying the recorded information. Accountants give orders; bookkeepers follow them.

Accounting encompasses the problems in measuring the financial effects of economic activity. Furthermore, accounting includes the function of financial reporting of values and performance measures to those that need the information. Business managers, investors, and many others depend on financial reports for information about the performance and condition of the entity.

Accountants design the internal controls for the bookkeeping system, which serve to minimize errors in recording the large number of activities that an entity engages in over the period. The internal controls that accountants design are also relied on to detect and deter theft, embezzlement, fraud, and dishonest behavior of all kinds.

Accountants prepare reports based on the information accumulated by the bookkeeping process: financial statements, tax returns, and various confidential reports to managers. Measuring profit is a critical task that accountants perform — a task that depends on the accuracy of the information recorded by the bookkeeper. The accountant decides how to measure sales revenue and expenses to determine the profit or loss for the period.

Comments

comments

stanley ng

Stanley Ng a writer of accloudant.com, from lifestyle entrepreneur, small business, cloud technology, and everything in between. Stanley loves to travel both for work and leisure, an eye opener for him to feel and meet each of his associates on how they work and live.

More Posts - Website

Leave a Reply