What is the major difference between the duties and responsibilities of an accountant and bookkeeper? Many people use these two words interchangeably and it can be described as a wrong perception. Although bookkeeping and accounting share some common goals, there are functional differences as well as differences in roles and responsibilities and each professional makes up a different stage of the financial cycle.
A bookkeeper records the daily transactions consistently and this process can be described as an inevitable part of building a solid business foundation.
Apart from recording financial transactions, the bookkeeper maintains and balances subsidiaries, keeps historical accounts and general ledgers, posts debits and credits, completes payroll and produces invoices as well.
One of the most prominent components of bookkeeping is maintaining a general ledger. It is often known as the basic document where the bookkeeper records the amounts from sales and expense receipts. This process is known as posting and the ledger can be created using specialized software or a computer spreadsheet.
Some factors make the responsibilities of a bookkeeper complex and they include the business size and the number of completed transactions as well. When these two factors become bigger, the workload of bookkeeper also increases.
In the ledger, the bookkeeper has to record all the sales and purchases completed by the business and some specific items need supporting documents as well. The bookkeeper has to perform all these tasks with utmost discipline and commitment as well.
Accountants look at the bigger picture compared to the roles and responsibilities of a bookkeeper.
Accounting can be described as a high-level process that turns data into information and produces financial models using that information.Bookkeeping is largely transactional while the process of accounting is more subjective in nature.
The responsibilities of an accountant include:
1) Preparation of adjusting entries (It is the process of recording details that have not yet been recorded in the bookkeeping process)
2) Preparation of company financial statements.
3) Analysis of costs of operations.
4) Completion of income tax returns.
5) Offering help to the business owner in understanding the impact of financial decisions.
The accountant offers reports that bring important financial indicators together and he/she comes up with a clear cut idea about the cash flow and profitability. An accounting professional converts the information from the ledger into statements and these statements always reveal the bigger picture of the business. Business owners seek the help of accountants for strategic tax planning, tax filing, and financial forecasting as well.
Many people are confused while describing the roles and responsibilities of a bookkeeper and an accountant. If you are a business owner or a manager, you should have the clear cut idea about the difference between bookkeepers and accountants, and you also should have a better understanding about the kinds of credentials that each professional should possess. Such awareness makes you familiar with how to use these professionals in the best possible manner for increasing the productivity of your business.
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