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Accounting Bookkeeping – What Is It

 

Accounting and bookkeeping should run hand in hand with the operation of any successful business. Because of the large number of transactions and activities a business makes, it is imperative to keep track of its flow of money. Once the flow is tracked and recorded, the business can then analyze the results. These results will be the basis of making the businesses financial statements.

 

To handle this responsibility, a company needs a department or a division that specializes in accounting bookkeeping. These people are privy to the businesses deepest financial secrets. Without them, companies would most likely run itself into the ground. This is why it is so crucial to have the best bookkeeeping services available.

 

Most people think that accounting and bookkeeping are the same thing. Well, they are not but both are related, just like sales and marketing. In today’s fast paced environment (especially in small business) the 2 are usually integrated into the 1 process- accounting bookkeeping.

 

Firstly it is worth explaining the distinct differences between accounting and bookkeeping.  Bookkeeping is the process of recording, classifying, tracking and monitoring financial transactions. Quite simply, bookkeeping is all about maintaining the businesses financial transactions. These financial transactions may encompass; purchasing, loans, mortgages, and any other activity that involves cash flow. In bookkeeping, the goal is to record and summarize these financial transactions and arrange them into a simple easy to use form.

Accounting, on the other hand, involves analyzing, recording, summarizing, reporting, reviewing, and interpreting financial information. The information used by the accounting staff comes from the data provided to them from the bookkeepers.

 

Bookkeeping is essentially a component of accounting. In an analogy, accounting is a tree while bookkeeping are the branches.

 

In a typical setting, accountants plan and set up the company’s accounting bookkeeping system. It plans a schedule for a day-to-day record keeping and record turn over. 

 

Financial software programs have helped accounting bookkeeping immensely. While many companies still rely on manual methods of accounting bookkeeping, the benefits of using computers for accounting bookkeeping far outweigh the cost of acquiring the computers and the software. Through computerization, accountants and bookkeepers can track, record, maintain, and analyze financial records and summaries in a faster, more accurate, and more efficient way.

 

Many modern companies also opt for automated accounting bookkeeping systems. These complex systems essentially allow records to be frequently adjusted as transactions take place. Templates and workflows can be set up within the program. When an account is then updated, the program automatically makes hundreds of calculations to reflect that change on the ledgers. This essentially makes the whole process of accounting bookkeeping far more accurate and time efficient.

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