difference between bookkeeping vs accounting

It deals with how governments, companies, and individuals create and acquire money as well as how they spend or invest money. The CFO is ultimately responsible for the accuracy of financial documents and should be prepared to draft letters explaining the documents to stakeholders (investors, the public, etc.) as well as make forward-looking guidance about how the company’s financial health is likely to change in the next quarter, year, and decade.Ī CFO should be able to apply many different strategic tools such as cost–benefit analysis or SWOT (strengths, weaknesses, opportunities, threats) analysis to understand the overall position of the company within the market and how it might change into the future.įinance is the catch-all term for the study and management of money and investments. In smaller companies, they might be the sole person in charge of finance management, while in larger companies they oversee, directly or indirectly, the bookkeepers, accountants, controllers, financial analysts, and finance managers. The chief financial officer (CFO) is the person in charge of finance management. In a small business, the controller might be the in-house accountant who coordinates with out-sourced bookkeepers and accountants who do the day-to-day and end-of-period accounting work, respectively. This management includes preparing internal reports about whether budgets were followed and confirming that the financial statements are correct.Ĭontrollers also hand off these important documents to the appropriate stakeholders. Controllers manage all of the accounting functions, from budget creation and adherence to the timely and accurate drafting of financial statements. The controller is the manager of the accounting department. The controller takes the information provided by accountants, double checks it for accuracy, and then reports on the financial health.Īt the pinnacle of this pyramid, the CFO should understand all of the financial statements and the wider market environment of the company and be able to use that for forecasting and decision making. To get automated profit and loss, cash flow statements, and balance sheets, use FlightPath by Baremetrics. These documents include the balance sheet, income statement, and statement of cash flows. Every year, all public companies must present financial documents detailing the current state of the company and how it has progressed over the accounting period. However, the most important and most typical task of accountants is preparing financial statements. They are also in charge of drafting and managing budgets based on input from the finance managers.Īccountants are involved in financial forecasting by visualizing revenue and expense data. While budgeting and the preparation of financial statements are tasks that overlap with bookkeeping, cost allocation analysis and forecasting are tasks often shared with finance management.Īccountants perform tasks related to cost allocation following accounting principles and legislation. This produces actionable documents that are easily understood by businesspeople and the wider public alike.Īccounting is the measuring, processing, and presenting of financial information about businesses, government bodies, or other economic entities.Īccounting comes in two forms: accrual accounting and cash accounting.

While the job can appear to be just following simple instructions, a bookkeeper should have a general appreciation of the duties of finance managers and accountants so that they keep all data in a usable format.īuilt on the foundation of financial health provided by bookkeeping, accountancy takes the information provided by bookkeepers and puts it in an understandable format.

Bookkeepers are responsible for maintaining all of the financial records for the company.īookkeepers are also generally responsible for invoicing customers, making sure bills are paid, ensuring there are no errors on any documents, and tracking revenue and expenses in general.

It is the day-to-day counterpart of the big idea work done under accounting.īookkeeping includes the creation of source documents, such as bills, invoices, and journal entries, so that there is a record of all financial transactions.Ī bookkeeper’s primary job is data entry. Accurate and meticulous journals provide the solid foundation of a company’s financial health.īookkeeping is simply the recording of financial transactions. If you imagine the financial management of your company as a pyramid, then the bookkeeping is at the bottom.

Difference between bookkeeping vs accounting