Bookkeepers vs. Accountants

The Difference Between Bookkeepers and Accountants

Bookkeeping and Accounting are somewhat mistaken to be same because they both deal with financial data, however similar they may seem, they ae both distinct professions. Bookkeeping is also seen as part of accounting, as it does the recording part of accounting.

What is Bookkeeping?

Bookkeeping is the daily recording of financial transactions such as: sales, purchases, receipts and payments by an individual or an organization, in a business. It is also called record-keeping and it deals with a general ledger i.e. a book that records all sales and purchases. The job of bookkeeping is carried out by a bookkeeper.

What is Accounting?

Accounting is the calculation, rectification, and communication of financial and non-financial information about businesses and corporations. Accounting deals more with statement of financial position (balance sheet) and income statement (profit and loss account). An accountant practices accounting.

Several organizations and business ventures require the services of a bookkeeper and an accountant to ensure the smooth running of the day to day operation as well as in the future; basic distinct functions exist for the bookkeeper and accountant

Functions of Bookkeeping

Some of functions of a bookkeeper in a business or an organization include the following:

·       Organizes, stores, access day to day financial operations

·       Uses the single entry or double entry (credit and debit) method for record keeping

·       They write daybooks such as: cash books, sales books et.c.

·       They use the general ledger, a record of accounts

·       Provide source document for all transactions

·       Documents book up to trial balance

·       Handles invoices and receipts

·       Completes payroll

Functions of Accounting

Some of functions of accounting in a business or an organization include the following

·       Designs the bookkeeping system

·       Analyzes and verifies recorded financial data

·       Completes income tax returns

·       Adjusts entries not yet recorded during bookkeeping

·       Uses the trial balance to create a balance sheet

·       Business Planning and advice

·       Auditing of account

·       Financial reporting of measured values

·       Advice on financial management

·       Create budget

·       Measures financial status of the business (profit or loss) based on the authenticity of records from bookkeeping

·       Forecasts the financial status of the business based on analyses of business record

The bookkeeper role vs The accountant role

The basic role of the bookkeeper is to record daily financial transactions in the business while the Accountant creates financial report from the record of financial transaction by the bookkeeper.

Bookkeeper Educational Qualifications and Skillsets

·       A bookkeeper may or may not be educated, but he or she must be able to read and write.

·       A high level of accuracy and organization is required of a bookkeeper

Accountant Educational Qualifications and Skillsets

·       At least a bachelor’s degree in accounting or a finance degree

·       Professional certification as a Certified Public Accountant (CPA), Certified General Accountant (CGA), Chartered Accountant (CA) or Certified Management Accountant (CMA)

·       Analytical skill, communication skill and presentation skills are skillsets required of an accountant

The differences between Bookkeeping and Accounting

1.     Bookkeeping deals with recording financial transactions while accounting analyzes, classifies, interprets and reports the contents of the financial data in a brief statement of account

2.     Bookkeeping identifies, measures and records daily financial transactions while accounting takes a step further to interpret and communicate these recorded financial transactions in a classified and summarized ledger account

3.     Bookkeeping records cannot be used to take managerial decisions while management can take profound business decisions using the information provided by the accountant

4.     Bookkeeping aims at systematic and proper recording of daily financial transactions while accounting aims at evaluating the financial status of the business and relay this information to the higher authorities to better inform their decision

5.     Bookkeeping does not involve preparing financial statements, only posting of credits and debits while in accounting financial statements are created

6.     Bookkeeping does not require any special skill, i.e. anyone who can read and write can record transactions, while accounting requires critical analytical and presentation skills

7.     Bookkeeping requires only recording and no analysis, while accounting involves analysis and interpretation of financial data from bookkeeping, and presentation of the findings in a report

8.     Bookkeeping could be single or double entry, while accounting has sub categories which are financial accounting, management accounting, cost accounting and HR (human resource) accounting

9.     Bookkeeping mainly uses ledgers and journals while accounting tools include balance sheets, cash flow statements and profit and loss accounts

10.  Bookkeeping solely keeps records while Accounting offer financial projections and advice for a business

11.  Bookkeeping does not involve preparation of budgets while Accounting aside its analytic, interpretative and communicative nature, involves preparation of budget and loan proposals from various analytic findings

12.  Bookkeeping is transactional while accounting draws meaningful insights from the data gotten through bookkeeping

13.  Bookkeeping involves handling invoices while accounting completes tax returns