Getting Down To Basics with Businesses

By | August 9, 2017

Similarities and Differences between Accounting and Bookkeeping Many a times, and bookkeeping is mistaken for accounting. Accounting is the systematic way of identifying, maintaining records, classification, analyzing and communicating financial information over a specified amount of time in order to understand the losses and profits of a company whereas publication keeping is a portion of the process in accounting through record of financial transactions. Book keeping provides information essential for preparation of accounts. Both processes have their similarities and differences as outlined below. Similarities Records
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In both accounting and book keeping, records are very important. Book keeping requires daily noting down for simple access when it comes to preparing accounts and accounting demands the records for preparation and analyzing of financial statements.
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Classification From the daily transaction records, they are classified to Different novels i.e. bank publication that’s used to document the deposits and withdrawals made, buy book for those records of all purchases made on credit, money book used for the purpose of documenting all cash payments such as trade payables like trade payables and petty cash purchases and money receipts like trade receivables and cash sales and finally the sales book by which non-cash sales are listed together with client’s key specifics and later transferred into the customer’s account. Differences Tools utilized Accounting uses this income statement, balance sheets and even cash flow statements because its main tools while in publication keeping journals and ledgers are used. Financial statement preparation While book keeping does not require any preparation of financial statements, accounting is mainly the preparation of those financial statements such as balance sheets, profit and loss statement and cash flow statements. Management role The management is not involved in book keeping but they’ve A particular interest in accounting documents since it’s helpful in checking on the operation of an organization and making of future choices based on that info. Decision making Whereas information provided by publication keepers cannot be Solely utilized to make conclusions, accounting data plays a significant part in making decision making in a company. Job role Book keeper’s roles are mainly to collect, record and classify information relating to financial transactions while accounting requires more skilled personnel to interpret and communicate the implications for decision making. Skills wanted Accounting is a bit complicated therefore it requires particular Skills while on the other hand accounting doesn’t require any specific skills because of its simple nature. Categories Accounting is categorized into cost, management and financial Accounting among other classes while reserve keeping is categorized into single entry and double entry. A lot of people tend to confuse book keeping and accounting to be the same thing. However, since we have seen in this paper the two processes Share some common features and as well have their differences that differentiate one from the other.