The terms bookkeeping and accounting are often used interchangeably. But the truth is, they are actually distinct and different. Let’s find out what’s the difference in the next few minutes.
Bookkeeping provides data while accounting translates the data into information.
You can think of bookkeeping as the eyes and accounting as the brain. So when your eyes see an arc of 7 colours in the sky, this data is sent to your brain. Based on past learnings, your brain determines that this is a rainbow.
Similarly bookkeepers work closely with accountants. They provide accountants with accurate data to help them see possible future business needs.
The table here shows some tasks bookkeeping and accounting can include.
|Categorise expenses||Tax expert advice|
|Profit & loss statements||Manage how bookkeeping is set up|
|Payroll & billpay||Monitors tax payment amounts|
|Reconcile bank accounts||Prepares annual tax returns|
|Invoicing||Determine company’s financial health|
|Partner with accountant for tax preparation||Forecast budgets and future plans|
These are just some examples that bookkeepers and accountants can take on in financial reporting.
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