Quite often when one hears the word 'bookkeeper', they automatically think 'accountant.' However, the job of a bookkeeper differs in scope in comparison to that of an accountant. There are many functions that they can perform, usually at a lower rate than that of a CPA. If you are unsure what they can do and not do, just ask a bookkeeper.
Both accountants and bookkeepers follow the steps in the accounting cycle. This cycle is completed each accounting period. An accounting period can be a year, six months, or one month, depending upon the size of the business. Most keep their books according to the accrual method, which is a more accurate representation of the true nature of the company's finances. The cash method can also be used, but this does not accurately reflect when revenue is earned or when money is spent.
The accrual method uses double-entries to record transactions. This is by far the most difficult concept to learn in this field, other than debits and credits! The accrual method can also show a profit on paper when a company is cash poor, so one should look at the financial statements as a whole to get an accurate picture of the company's fiscal fitness.
Accountants and bookkeepers are in charge of carrying out and completing the accounting cycle. Bookkeepers usually perform the first few steps and the accountant or CPA does the rest. In some small businesses the owner or bookkeeper might actually do all of the steps. Accounting software has made it easier for almost anyone to keep their own books, but some accounting knowledge is still advised.
The first step in the cycle is to analyze each business transaction. Most transactions involve an exchange of money or credit. Then, these are journalized in the general journal and sometimes special journals, such as cash payments. Once journalized, they are posted in the general ledger or other subsidiary ledgers. The accountant will then take over and complete the cycle, which includes a worksheet, a trial balance, and the associated financial statements. The accountant or CPA is also tasked with interpretation of the financials and communication with management.
Bookkeepers can have other duties in the company. The might be responsible for reconciling the bank statement, billing customers, and paying invoices. They could keep track of the petty cash fund, make deposits, or even cut payroll checks. They may be responsible for compiling a budget based on past expenditures.
They could also have to watch inventory levels for supplies and equipment. They may be authorized to buy calculators, printers, computers, or copiers. They might also be in charge of maintaining files and information.
They often have a lower educational level than that of an accountant. An Associate's degree may be required if there is not considerable business experience. They must be familiar with the accepted accounting principles and often have some knowledge of tax law, especially if they deal with payroll. They must be detail oriented and organized. A great bookkeeper can be invaluable to any company, big or small.
Both accountants and bookkeepers follow the steps in the accounting cycle. This cycle is completed each accounting period. An accounting period can be a year, six months, or one month, depending upon the size of the business. Most keep their books according to the accrual method, which is a more accurate representation of the true nature of the company's finances. The cash method can also be used, but this does not accurately reflect when revenue is earned or when money is spent.
The accrual method uses double-entries to record transactions. This is by far the most difficult concept to learn in this field, other than debits and credits! The accrual method can also show a profit on paper when a company is cash poor, so one should look at the financial statements as a whole to get an accurate picture of the company's fiscal fitness.
Accountants and bookkeepers are in charge of carrying out and completing the accounting cycle. Bookkeepers usually perform the first few steps and the accountant or CPA does the rest. In some small businesses the owner or bookkeeper might actually do all of the steps. Accounting software has made it easier for almost anyone to keep their own books, but some accounting knowledge is still advised.
The first step in the cycle is to analyze each business transaction. Most transactions involve an exchange of money or credit. Then, these are journalized in the general journal and sometimes special journals, such as cash payments. Once journalized, they are posted in the general ledger or other subsidiary ledgers. The accountant will then take over and complete the cycle, which includes a worksheet, a trial balance, and the associated financial statements. The accountant or CPA is also tasked with interpretation of the financials and communication with management.
Bookkeepers can have other duties in the company. The might be responsible for reconciling the bank statement, billing customers, and paying invoices. They could keep track of the petty cash fund, make deposits, or even cut payroll checks. They may be responsible for compiling a budget based on past expenditures.
They could also have to watch inventory levels for supplies and equipment. They may be authorized to buy calculators, printers, computers, or copiers. They might also be in charge of maintaining files and information.
They often have a lower educational level than that of an accountant. An Associate's degree may be required if there is not considerable business experience. They must be familiar with the accepted accounting principles and often have some knowledge of tax law, especially if they deal with payroll. They must be detail oriented and organized. A great bookkeeper can be invaluable to any company, big or small.
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