Bookkeeping accounting uses the basic accounting concepts in keeping a record of the business transactions and presenting them to an accountant for their perusal to complete an accounting cycle.
Bookkeeper or accounting technicians are entry-level accounting professionals that keep an eye on the financial events within the company. They mostly collect invoices, track expenses, make vouchers, post entries, ask for receipts from staff, keep accounting records organized and help accountants in matters related to the services area. Let’s go through some basic concepts of bookkeeping to get an in-depth understanding of the concept.
Bookkeepers post entries in the accounting system using the double-entry concept. It means there are two aspects of each transaction. Something goes out of the business, and something comes inside the business within some specific accounting transaction. Suppose accounting transaction is not posted properly with principles of the double-entry accounting. In that case, there will be problems at the time of forming trial balance and formation of the financial statements.
Double-entry refers to the debit and credit sides of the transactions. Debit represents the left side of the transaction and is written at the start. Credit refers to the right side of the transaction and is written after the debit.
Bookkeeping vs accounting
Bookkeeping is concerned with the recording of financial transactions. It’s a function at the start of the financial transaction and does not require advanced accounting knowledge. However, a basic accounting understanding is necessary to ensure proper bookkeeping. The basic accounting concepts include matching concepts, accrual concepts, and prudence concepts, etc.
the period has been recorded, the bookkeeper’s work ends here, and the accountant’s function starts.
On the contrary, accounting is about the technical aspects of the accounting cycle. For instance, preparation of the financial statements, related disclosures, and closing of the books is the accountant’s responsibility, not the bookkeeper’s.
Advantages of bookkeeping
There are various advantages of bookkeeping that include completion of the financial transactions, the accuracy of the initial phase accounting cycle, completion of financial records, and assistant to the overall accounting process.
Completion of the financial record
A dedicated bookkeeper ensures that all transactions related to business have been recorded in the appropriate chart of accounts. So, a financial summary of the company presents a complete record with accuracy.
Accuracy of initial phase accounting
Accuracy must be maintained in the initial phase of the accounting; if there is wrong input in the books of the accounts, there will be a problem in the reporting stage of the accounting.
Assistant to the overall process of accounting
The bookkeeper has a strong understanding of the company’s financial picture because he has posted all the transactions him/herself. The bookkeeper can be of more excellent value if there is some strange movement in the accounting figures.
There are different bookkeeping software, including Quickbooks, Xero, Zoho Books, Wave accounting, and many others.
Suppose the business used bookkeeping software, the importance of the bookkeeper increases. The reason is that this bookkeeping software just needs transactions to be recorded and got the ability to complete the reporting. Accounting software brings automation and integration within the accounting cycle that increases the accuracy and efficiency of the accounting process.