Bookkeeping and accounting are two terms that are often found in company management. Both are interrelated and are equally important in a company’s finances. Bookkeeping is the first step of accounting activities and can be said as a basic foundation in the accounting process. Now too many companies have done this online, well the people who do bookkeeping online are called double entry bookkeeping. If done correctly, the accounting activities will go well. But behind it all, bookkeeping and accounting also have differences.
These differences in accounting and accounting are often not realized by business owners. If studied more deeply, the differences in accounting and accounting can be seen even from its understanding. For a more complete explanation, here is a deeper explanation of what are the differences between bookkeeping and accounting.
Understanding Bookkeeping and Accounting
Accounting is a broader term. Accounting is an area of work related to the process of financial data and its supporters such as searching, collecting, recording, analyzing, interpreting, reporting and even making policies related to financial data from those who need it. The individual who is responsible for this process is called an accountant.
Meanwhile, bookkeeping is the recording stage in the accounting process. Bookkeeping refers to the aspect of storing accounting records, and this includes all information about the transactions and financial activities of a business. From this understanding, we can conclude that bookkeeping is part of accounting itself.
The Purpose of Bookkeeping and Accounting
Every business transaction recorded in books such as cash, goods, sales and purchases aims to provide an overview of revenues and expenses at the end of the accounting period. Meanwhile, the accounting process aims to provide a variety of reports that can unite the main financial indicators. The result is a better understanding of actual profitability and awareness of cash flow in the business. Accounting converts information from ledgers into statements that reveal a bigger business picture.
Well, the above review is a good understanding and purpose of bookkeeping and accounting. Hopefully more understanding!