The Differences Between Bookkeeping And Accounting

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A lot of people do not know what differentiates bookkeeping from accounting.  These professions will share similar goals, but they do support different stages of the financial cycle in your business.  It is important that you know what the functions of each profession are and what role they will play in a business.

The Function Of Bookkeeping

Bookkeeping is the daily financial work that is done in any business and will include the recording of daily transactions in a set and consistent manner.  Bookkeeping is the basis of any financially successful business. There are some tasks that are completed by bookkeepers in the day.

These tasks will include the recording of financial transactions, the posting of debits and credits to the accounting software, creating invoices, completing payroll and maintaining the financial accounts.  One of the main parts of bookkeeping is the maintenance of the general ledger which is a record of the sales and expenses.

The Function Of Accounting

Accounting is a higher-level process when compared to bookkeeping.  Accountants will use the information produced by the bookkeeper to produce financial models and final accounts.  It is important to note that the accounting process is more subjective than the bookkeeping one.

Like bookkeeping, accounting will include a range of different tasks which need to be completed.  These tasks include the preparations of adjustment entries, the preparation of financial statements, the analysis of operation costs, the completion of tax returns and helping the business understand the impact of financial decisions.

The accounting process will provide a business with financial indicators which results in a better understanding of the profitability and cash flow of the business.  Accounting will take the transactional information from the general ledger and turn it into a bigger picture of the business.

The Role Of Bookkeepers

Bookkeepers are typically required to have 2 to 4 years of bookkeeping experience or an associate’s degree.  They will also need to have a keen eye for detail and accuracy while being knowledgeable about financial topics.  The work of a bookkeeper will be overseen by an accountant or by the owner of the business that they are working for.

The Role Of Accountants

To become an accountant, a person will need to have at least a bachelor’s degree in accounting.  There are some financial degrees which are also considered to be an adequate substitute for the accounting degree.  There are other professional certifications that accountants are eligible for should they choose to take them.

These certifications will require sufficient education and experience before they are awarded.  Certified Public Accountant or CPA is the most common of these certifications and to become a CPA an accountant must pass an additional examination.  They will also need to have experience working as an accountant.

There are some ways that bookkeeping differs from accounting.  The primary difference is the level of the work that is done.  Bookkeeping is daily transaction work which is vital for any business while accounting takes this data and transforms it into a bigger picture for the business. For more information please visit

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Ryan Kh is a big data and analytic expert, marketing digital products on Amazon's Envato. He is not just passionate about latest buzz and tech stuff but in fact he's totally into it. Follow Ryan’s daily posts on Catalyst For Business.