Every business enterprise uses bookkeeping and accounting as these are the two most important functions. However, many of us often tend to think that both of these tasks are the same and that only one person can carry out both the tasks. This is a myth that needs to be broken, and people should know the finer differences that exist between these two activities. Bookkeeping is the maintenance of records of all financial transactions whereas accounting is the task of summarising, interpreting, reporting, classifying, and analysing the financial data. You must be wondering why you should learn about both these tasks as the easiest way is to consult the best accounting firms in singapore.
To the untrained eye, both might seem to be similar as both need some accounting knowledge but bookkeeping can be carried out with some basic knowledge only whereas accounting requires in-depth domain knowledge. Here are the top differences between bookkeeping and accounting that all business owners or executives must learn:
Management will never be able to take any decisions based on the data available from bookkeeping records while it can be easily done with the help of the data provided by the accounting executives.
Bookkeeping is carried out with the sole objective of recording all financial transactions properly and in a systematic manner. On the other hand, accounting is undertaken with the objective of understanding the financial status of a company and conveying the same to the relevant people.
Bookkeeping is the basic process of recording the data pertaining to every financial transaction, but no financial statements can be prepared using them. Only after analysing the data through accounting methods, one can prepare financial statements. Even the best accounting firms in Singapore use accounting methods to prepare financial statements quickly.
Bookkeeping can be undertaken by anyone with basic accounting and record keeping skills. On the other hand, accounting requires in-depth knowledge of accountancy and can be undertaken by only those professionals with considerable knowledge and experience in accounting.
Bookkeeping does not facilitate any analytical interpretation whereas accounting is robust method to analyse the financial status of a company.
Bookkeeping is of two basic types – single entry and double entry, whereas accounting is concerned about preparing the budgets as well as plans of a company.
Bookkeepers usually work under the supervision of accountants and involve only entering data pertaining to different financial transactions of a company. The work of an accountant start only after the bookkeeper provides him/her with all the entries made in journals and ledgers.