Many Australians believe bookkeeping and accounting are interchangeable. Although they share some similar tasks and responsibilities, they are distinctively different. Accounting and bookkeeping both work to aid businesses in understanding their finances and financial health, but there are some vital dissimilarities between the tasks of a bookkeeper and an accountant. It is important to understand that bookkeeping and accounting are both fundamental for a business to be successful. View our Accounting and bookkeeping course online.
Differences between accounting and bookkeeping
Bookkeepers are in charge of recording financial transactions accurately in an organisation’s financial system or software. Accountants, on the other hand, are in charge of interpreting, categorising, analysing and summarising financial data; preparing reports; making sure a business meets its reporting obligations and compliance requirements; as well as financial planning.
What is bookkeeping?
Bookkeeping is the process of recording daily business transactions in a consistent way. A bookkeeper’s fundamental role is to support financial records for an organization. In order to do this job, a bookkeeper must focus on details and be meticulous in their daily dealings. This allows the bookkeeper to keep up with company expenditures, income, and payroll.
Duties of a bookkeeper
The functions of a bookkeeper are as follows:
- Documenting financial transactions and preparing first financial statements
- Posting debits and credits
- Generating and processing invoices, receipts, payments, and other financial transactions
- Preserving and balancing subsidiaries, general ledgers, and historical accounts
- Completing, processing and supporting the payroll system
- Merging accounts and preparing reconciliation reports
- Managing amounts owed by debtors, and amounts owed to creditors
- Computing goods and service tax
- Preparing and lodging business activity statements
What is accounting?
Accountants play an important role in any business, whether it is a large conglomerate or a medium to small firm. They are in charge of recording and overseeing the flow of funds through an organization. Accounting is a sophisticated process that utilises financial facts collected by a bookkeeper or business owner. The process of accounting is more particular than bookkeeping. Therefore, an accountant is a qualified person who carries out accounting functions such as audit or financial statement analysis. Accountants are usually employed by a large accounting firm, with an internal accounting department in a business, or they can also be self-employed.
What does an accountant do?
The functions of an accountant are as follows:
- Examines revenue and advocate the right budget levels and ensures expenditure control
- Ascertain and processes monthly payrolls requirements
- Handles financial data and reports for the firms’ automated financial systems
- Resolves accounting issues
- Set up, support, organize and implements accounting and accounting control processes
Final thoughts on accounting & bookkeeping
Despite the differences, financial records and accurately balanced finances produced by the bookkeeper combined with the flawless accounting functions such as auditing or financial statement analysis; contribute directly to the success of a business. Make sure you have a good bookkeeping and accounting team on hand!