The terms bookkeeping and accounting are often used interchangeably, as both involve working with financial data of a business operation and generating the necessary reports. Financial statements and tax returns fulfill legal compliance requirements, while balance sheet and statements of income, cash flow and earnings reflect a company’s growth and financial standing.
The accounting process basically comprises first recording and classifying financial transactions, and then analysing and reporting the financial data. Accountants are qualified to handle the entire accounting process. Bookkeepers are only qualified to handle recording financial transactions. Accountants often advise or supervise bookkeepers and review their work to ensure accuracy. A Singapore Accounting Company or any accounting services provider Singapore can provide full-suite bookkeeping and accounting services to take the place of any in-house bookkeeper or accountant.
Singapore Accounting Company
Main differences between Bookkeeping and Accounting include:
- Bookkeeping does not require any special skillset or analysis, only identifying, measuring and recording financial transactions, the objective being to record all financial transactions clearly and systematically. Accounting summarises, interprets, compiles and communicates these organised bookkeeping data.
Bookkeeping does not prepare financial statements, tax returns or other sophisticated reports for submission or perusal, while accounting does so, to communicate the information to the relevant authorities, after interpreting the financial data and situation.
Bookkeeping does not provide the data or conclusions that can help management make critical financial decisions for the company. Accounting
includes processes such as accruing or deferring expenses and revenue, analysing and interpreting the company’s operational expenses, filing taxes and other regulatory payments, preparing financial statements and reports, all of which can be relied upon by business operators to make the best financial decisions to stabilise or grow the company.
Though the finer differences in their nature and function should be appreciated, the line separating Bookkeeping and Accounting has been blurring and diminishing with the advent of sophisticated accounting software. More and more accounting functions are now gradually being incorporated into the bookkeeping process while the preparation of financial statements, which accounting claims, can be reliably generated by bookkeeping software.