While they are often done by the same person at small businesses, the difference between bookkeeping and Accounting involves analayzing data.
While bookkeeping and accounting are both essential business functions, there is an important distinction. Bookkeeping is responsible for the recording of financial transactions. Accounting is responsible for interpreting, classifying, analyzing, reporting and summarizing financial data. The biggest difference between accounting and bookkeeping is that Accounting involves interpreting and analyzing data and bookkeeping does not.
The accounting process involves recording, interpreting, classifying, analyzing, reporting and summarizing financial data. Bookkeeping is the process of recording financial transactions. Recording financial transactions is the first part of and the foundation of the accounting process. Bookkeepers handle the recording part of the Accounting process. Accountants handle all parts of the accounting process.
Bookkeepers record financial transactions in chronological order on a daily basis. Because Accounting software automates many of the processes, some bookkeepers in small organizations also classify and summarize financial data in financial reports. These bookkeepers are often referred to as full-charge bookkeepers. They make higher salaries than bookkeepers but lower salaries than accountants.
Accountants analyze financial transactions in financial statements and business reports following Accounting principles, standards and requirements. Accountants analyze and interpret financial data to report the financial condition and performance of the business to company leaders to help them make informed business decisions.
Previously, businesses providing both goods and services had to calculate the VAT and service taxes individually. GST eases the process by removing the distinction between goods and services; tax will be calculated for the final total, not individual products or services. This will help SMEs take advantage of the tax incentives for payment on the procurement of input goods and services (like import, interstate and local purchases, and telephone services).
Currently, every invoice contains a long and confusing list of taxes levied on the goods and services involved in the transaction. GST will make invoicing simpler, as only one tax rate will need to be mentioned.
Bookkeeping and accounting can appear to be the same profession to the untrained eye. Both bookkeepers and accountants work with financial data. To enter either profession, you must have basic Accounting knowledge. Bookkeepers in smaller companies often handle more of the accounting process than simply recording transactions. They also classify and generate reports using the financial transactions. They may not have the education required to handle these tasks, but this is possible because most accounting software automates reports and memorizes transactions making transaction classification easier. Sometimes, an accountant records the financial transactions for a company, handling the bookkeeping portion of the accounting process.
Taking a few Accounting courses and developing a basic understanding of accounting will qualify you for a job in bookkeeping. To work in accounting, you must have at least a bachelor's degree to become an accountant or, for a higher level of expertise, you can become a certified public accountant. Accountants are qualified to handle the entire accounting process, while bookkeepers are qualified to handle recording financial transactions. To ensure accuracy, accountants often serve as advisers for bookkeepers and review their work. Bookkeepers record and classify financial transactions, laying the groundwork for accountants to analyze the financial data.