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How is Bookkeeping and Accounting Different

Working in the money part of a business is always confusing. Some people may call you the bookkeeper and others will say you’re in the accounting department. So what is the difference between the two?

First let’s take a look at accounting. This will help you to better understand what each is and what they do in a business. The accounting department is responsible for many things in a company. It tracks any and all financial transactions with a systematic record process. It performs reports and analyses all financial aspects of the company. The accounting department handles all incoming bills as well as outgoing,. There are some companies, usually smaller ones, which incorporate the bookkeeping method into their accounting.

Usually there is an accountant for the accounting department and they are responsible for overseeing the money for the business. They also take care of taxes for the company as well as any audits that may come up. They keep track of all assets for the company and all accounts receivable and payable.

Bookkeeping in a way is much like the word. All money transactions for a business are kept track of by a systematic method of record keeping. Bookkeeping, however, does not deal with analyzing the financial part of the company. It simply is a method of recording all of the financial transactions. The name bookkeeping came about as a result of all of the records being kept in a large book. The bookkeeper writes down all entries and then posts them to a ledger. This helps to track incoming and outgoing money for the company.

There may be some companies that still use the book method for their bookkeeping department but most companies use a software program meant strictly for bookkeeping. When money is tracked in this manner, you still need to keep up a cash book, a daybook and a ledger. When it comes to bookkeeping you will notice that there are two different kinds: single entry and double entry. Many companies like the double entry method as you have a way to double check your original entry. In single entry you are putting an entry in your book either under credit or debit and it is all under one account where a double entry you are putting the entry in twice, once on a main account but in the main account are pages for each individual account so that you may check your entries at any time to see that all adds up.

The way a company handles its finances mainly depend on how large or how small it is, both ways have their advantages and disadvantages. The larger the company is, you will find that they have an entire department devoted to accounting.