There is a common general assumption that the role of a bookkeeper is similar to that of an accountant. This is understandable, as bookkeeping and accounting both deal with financial data and are often interlinked. However, though they are related, there are subtle but important distinctions to be made between the two. Let’s unpack this, shall we?
The Theoretical Differences
Bookkeeping is exactly what it sounds like: it is the keeping of financial records in books. Of course, in this modern age, books here could mean anything from an actual book/ledger to accounting software online. The main responsibility of a bookkeeper in a business is to record its daily financial transactions consistently and accurately. This helps to ensure that bills are paid and money is received on time. Bookkeeping is thus a relatively straightforward process, primarily requiring that bookkeepers have a good eye for detail and a solid grasp of basic accounting knowledge.
Accounting, on the other hand, requires a more in-depth knowledge of accounting principles, as it constitutes the interpretation, summarization and reporting of data produced through bookkeeping. Accountants thus require a higher level of educational certification in accounting compared to bookkeepers, and will earn a correspondingly higher salary. There are many different types of accounting – managerial, financial, forensic, tax, project, etc. In general, however, an accountant’s role consists of turning the hard numbers recorded by a bookkeeper into subjective information about where cash is flowing in the … Read the rest