Financial reporting process has gained a lot of popularity in the small to medium scale businesses as they have seen multinational companies building fortunes by the use of valuable financial information in the right framework to resolve business-related problems. Financial reporting process has following steps:
Identify and Analyze:
Identify and analyze the business processes and potential business transactions which ought to be recorded in the financial books. There are various material movements and transactions being carried out within the organization and outside of the organization. Not all of those transactions are supposed to be recorded in the financial accounts of the company. This step helps the business identify the recordable process and determine the chart of accounts suitable for this sort of business entity.
Recording Journal Entries:
This step involves the recording of journal entries into the financial reporting system, as a long list of debit and credits with the proper description of each of the transaction. This also depicts the ledger the entries are expected to hit and the value as well by which credit or debit will take place.
Accounting entries are then posted to ledger to which these entries were pertaining to and balances of each of the ledger are calculated.
Various ledgers are then shifted to trial balance to ensure the debits and credits are equal and balanced. Various adjusting entries are passed to finalize the accounts.
Financial statements are drafted from the trail balance as each ledger balance is accessed and placed into the designated position of that particular account. There are three different kinds of financial statements.
it contains the assets, liabilities and equity elements from the ledgers and it depicts financial position at a particular moment in time.
this financial statement contains the income expense elements of the financial ledgers for a particular period.
this financial statement contains the detail of cash movement related to the business entity.
As the accounting process cycle is finally defined above, now we can determine the differences and similarity between accounting and bookkeeping.
Recording of the day to day business transaction and arrange the data in a reasonable manner is generally considered as a bookkeeping service. Bookkeeping is a part of the accounting cycle, it often involves recording and arranging purchases, sales and inventory movement. You can easily find WeAccountax Bookkeeping Services London in the UK.
Whereas accounting is a general term which covers all aspect of financial reporting including bookkeeping. Accounting is a greater term as it involves accounting treatment judgment and financial statement designing and chart of accounts development. Check out the best Accounting Services Firm London
The basic difference between accounting and bookkeeping is their scope and functionality within the commerce division of the business. Bookkeeping generally pertaining to recording day to day business dealing and their financial impacts in the accounting system. Whereas anything beyond bookkeeping to the presentation of financial statements, developing accounting policies and providing judgment solution to the new arising accounting issues for the business.
Role / Position:
Bookkeeper is often appointed with a reasonable 3-year experience for general data entry and accounts data entry. This is often an entry level position which requires 3 to a 4-year experience of data entry. In complex taxation related economies, bookkeepers are responsible for identifying the various taxing values on the invoice or sale receipt. As evident as it seems, bookkeeping is relatively a simpler task. Even if the role is outsourced, accountancy firm will charge a relatively smaller fee if only bookkeeping is outsourced and remaining accountancy function is operated indoor.
Accountant whereas is considered as a senior accountancy post and is often in charge of maintaining financial accounts. It includes supervising whether the accounting entries are being rightly posted. Whether the accounting policies formulated are right for the organization. Are they being followed while booking accounting entries in various ledgers?
Usually, bachelor's in accounting or diploma in accountancy are enough to be hired as a bookkeeper. As it only requires basic accounting understanding to be able to perform daily job duties. Various bachelor's programs available which can provide an individual to acquire necessary skills to acquire this position.
For the accountant position, qualification plays a very important role. Professional qualification depending on the country is often required to meet the technical needs of accountant position. A strong grip on taxation, accounting and auditing are necessary in order to meet the challenges of this position.
Institute of chartered accountants England and Wales and Association of certified chartered accountants are two most recognized chartered accountant bodies in the United Kingdom. As the qualification has improved relatively the salary packages of accountants will also be higher when compared to bookkeeper and company has to bear extra cost for the extra bit of advantage of having a professionally qualified accountant.
In short, often bookkeepers and accountants are confused. Their scope, area of work and criteria to be met exhibits are the major difference between both professions.