They use one of two major record-keeping systems, which we will discuss in further detail later on. Generally speaking, bookkeepers record such financial activity chronologically. The primary objective of a bookkeeper is to accurately record all financial transactions logically and systematically. Since bookkeeping and accounting are categorized as two distinct processes, it only makes sense that they would differ in their ultimate objectives as well. We’ll demonstrate how you can save money while improving your efficiency and accuracy when you outsource your back office services to TEAM LUXA. In other words, accountants can do more than record transactions they are also trained to explain what that financial data means to key stakeholders within the company.įor example, an accountant can generate reports on the company’s current financial condition, which in turn can guide the owner or executive to make informed business decisions going forward. Accounting is defined as the “systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information.” In short, bookkeeping is the process of recording financial transactions.Īccounting, on the other hand, has a broader scope than bookkeeping. The first major difference between bookkeeping and accounting lies in their respective definitions.īookkeeping is defined as “the process of accumulating, organizing, storing, and accessing the financial information base of an entity.” It is vital for day-to-day business operations and is the foundation for preparing financial statements, tax returns, and other important reports. In this article, we will discuss 5 major differences between bookkeeping and accounting, and how each position plays an important part in business growth and sustainability. While bookkeeping and accounting are very similar in their functions, there are significant differences between these two roles. Both of these roles help business owners and CEOs keep track of expenses, make informed business decisions, and potentially avoid serious issues such as fraud and embezzlement. Bookkeeping and accounting are two critical aspects of business operations in any industry.
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