Many people wonder what the difference between accounting and bookkeeping is. Accounting is a matter of analysis. Accountants are charged with examining financial information and presenting what they discover in a format that is useful to a business.
Bookkeeping is basically recordkeeping. Bookkeepers’ responsibilities are less complex; they are tasked with entering all the necessary information properly. Although there is some overlap in the duties that accountants and bookkeepers perform, their primary goals are actually distinct.
Bookkeeping and accounting may appear to be the same profession to an untrained eye. This is because both accounting and bookkeeping deal with financial data, require basic accounting knowledge, and classify and generate reports using the financial transactions. At the same time, both these processes are inherently different and have their own sets of advantages.
Read this article to understand the major differences between bookkeeping and accounting.
The essential differences between the two functions are:
- The accountant has more responsibility than the bookkeeper.
- The bookkeeper typically reports to the accountant.
- The accountant is significantly more highly trained than the bookkeeper.
- The bookkeeper is largely focused on recording transactions, while the accountant engages in a much broader range of activities.
- The accountant engages in more analysis work than the bookkeeper.
- The accountant designs accounting systems, which is not a bookkeeping task.
- The accountant may be a CPA, while a bookkeeper is unlikely to qualify for it.
Despite the differences between accounting and bookkeeping, the two functions are intrinsically interconnected. Accountants rely on the meticulous records maintained by bookkeepers to provide them with the raw data they need to fuel their analytical evaluations and interpretations.
Without accurate data, they would be unable to use their training to offer helpful recommendations to their clients.
Bookkeepers depend on the systems established by accountants to provide them with both a clear idea of what information must be logged and the proper structure for their recordkeeping. When it comes to finances, accountants tend to deal with the big picture, and bookkeepers mind the details.
Despite the difference between accounting and bookkeeping, professionals in both fields play vital roles in maintaining the financial health of a business.
Did you know that at PAQ Group, we have an in-house Chartered Accountant (CA) that you can leverage to your advantage? What does this mean for you? This means that you get that additional business knowledge, advice and insights when you have your initial consult.
If you’re still unsure about bookkeeping services or where to start, please don’t hesitate to get in touch with us; we’ll be happy to answer any bookkeeping questions you may have.