Bookkeeping and accounting are closely related but distinct financial processes that play essential roles in managing a business’s financial records, reporting, and decision-making. The majority of businesses often struggle to understand the major differences between accounting and bookkeeping.
That’s why we consulted resources from Finsmart Accounting – one of the leading accounting outsourcing companies – to share everything about bookkeeping vs accounting.
Let’s start!
Bookkeeping:
Recording transactions: Bookkeepers enter financial transactions into ledgers, journals, or accounting software. These transactions include sales, expenses, payroll, and other monetary activities.
Categorization: Transactions are classified into specific accounts, such as cash, accounts receivable, accounts payable, inventory, and expenses.
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Financial statements: Bookkeepers generate basic financial statements, such as the income statement and balance sheet, based on the data they record.
Accounting:
Financial analysis: Accountants analyze financial data to provide insights into the company’s financial health, performance, and trends.
Financial reporting: Accountants prepare comprehensive financial statements, including the income statement, balance sheet, and cash flow statement. These statements provide a comprehensive view of the company’s financial position.
Budgeting and planning: Accountants collaborate with management to create budgets, forecasts, and financial plans that guide the company’s activities.
We hope that the above post helped you learn everything about the difference between bookkeeping and accounting. Want to learn more? Read the full blog about bookkeeping vs accounting.
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