In the field of finance the terms “accounting” and “bookkeeping” are present. And although in a colloquial sense they mean the same thing and are treated as synonyms, in fact one cannot put an equal sign between them. These terms are used to describe, for example, companies that deal with the accounting of other entities, i.e. accounting offices, bookkeeping offices. Considering their service activities, they basically offer the same range of services. Read the article to the end to find out if bookkeeping is also accounting.
Accounting
Bookkeeping is a much narrower field than accounting and is one of its components. It can be defined as the recording system of accounting. It allows the entrepreneur to control the assets and the sources of financing of the company. In its area we can distinguish full accounting, which consists of keeping commercial books. It is also possible to do simplified accounting, which can be done as a lump sum, revenue and expense ledger or tax card.
The work of an accountant will include:
- keeping accounting books of the company,
- keeping records of economic events,
- preparation of required financial reports,
- recording information on the amount of money spent on salaries for employees,
- segregation and archiving of company documents,
- creating balance and turnover statements,
- valuation of liabilities and assets,
- filing of company tax returns,
- filing of social security declarations.
Is bookkeeping also accounting? – Accounting
Accounting is a much broader term. It can be defined as a formalized system of information processing concerning all economic events taking place in a given company. Accounting allows for the collection, processing and presentation of information that affects the further functioning of the company. In addition to this, accounting provides an assessment of a company’s situation from three perspectives. These are, the perspective:
- Financial – it informs about the state of finances as well as assets of the company, and also about the financial result obtained in a certain period of time. This information is also important for investors and lending banks.
- Tax perspective – informs about the company’s tax obligations, which are important for tax offices,
- managerial – reports on the effectiveness of the company’s operations. This data is important for management or shareholders.