Last updated on July 19th, 2023 at 12:02 pm
The finance and accounting domain is burgeoning with new career paths as technology and newer trends keep popping up. Used interchangeably, accounting and bookkeeping are two popular terms the financial industry lives by.
Accounting, as widely known, refers to analysing, interpreting, classifying, reporting and summarising a business’s financial data. Bookkeeping is limited to recording financial transactions. The two concepts are fundamentally different, each requiring a different skill set. For instance, an aspiring accountant may need to sit for the CMA exam, which isn’t necessary for a bookkeeper.
Read the article if you are confused about the two and cannot decide which career option is for you. It will walk you through the difference between the two job roles and the responsibilities each entails.
Bookkeepers v/s Accountants: How are they different?
The differences between bookkeepers and accountants are minor but necessary for defining their responsibilities. While bookkeepers focus on daily updation, accountants are responsible for the more prominent financial image of the company. Read on to learn the job roles and responsibilities of bookkeeping and accounting.
Bookkeeping
Bookkeeping is securing a company’s financial transactions in an organised manner, usually in a ledger. Recording and maintaining such transactions always comes in handy during tax audits and rechecking any financial transaction-based errors. The process is a part of the more extensive work of accounting.
Key Responsibilities
The key responsibilities of a bookkeeper in accounting are as follows:
- Preparing an updated ledger
- Separating different essential accounts
- Developing bookkeeping rules and procedures
- Running payrolls and invoice generation
- Ensuring financial ledgers as legally compatible
- Maintaining secondary and tertiary accounts, if needed
- Allocating finances properly to maintain the balance sheet
- Assisting during trials and tax audits
Accounting
Accounting is measuring, securing and analysing a company’s financial assets in a way that positively affects its growth. In an organisation, an accountant is responsible for creating all-important financial decisions. They are also responsible for tax audits, balance sheet updation, bank statements and error-free financial records.
Key Responsibilities
The key responsibilities of an accountant are as follows:
- Overviewing and managing all account transactions
- Analysing budgetary trends and preparing forecasts
- Ensure timely bank-related transactions in the company
- Prepare audit-related financial documents
- Presenting the company’s financial goals
- Assisting positive growth in the company’s financial graph
What are the differences between bookkeeping and accounting?
A regular accounting cycle has eight levels:
- New transaction
- An entry in the accounting ledger
- Posting
- Updating the balance sheet
- Worksheet duty
- Adjusting the trial balances in the trial sheet
- Generating a financial statement
- Closing the ledger
The first six assignments are in the domain of the bookkeeper. The accountant performs the last two. Apart from the basics, here are some more fundamental differences between the two jobs:
Educational qualifications
Bookkeeping and accounting require different educational qualifications mentioned in the eligibility criteria.
Bookkeepers can join directly after high secondary completion or with some work experience, depending on the organisation’s needs.
Accountants need a bachelor's degree or higher. Many aspiring candidates prepare for the CMA exam or enrol for similar postgraduate diplomas.
Specific skills
Bookkeepers can work without extreme technical or job-specific knowledge.
Accountants need accounting degrees and previous work experience. The accountant requires technical competence and specialised analytical skills to present the company’s financial growth and trends to the stakeholders. Communication skills and basic knowledge of reports/slides are required to present the company’s financial growth.
Important financial decisions
The complexity of the job is a lot less for bookkeepers. However, their work entails minute attention to financial details and a solid mathematical bent of the mind. Any mistake in the daily updation of a ledger can lead to accumulated errors. However, bookkeepers are outside the decision-making space.
Accountants require extremely high analytic skills to focus on the company's financial figures. The accountant's predictions and decisions pull the company's graph upward.
Career potential
Accounting offers a long-term and secure employment opportunity. Even for beginners, this ensures a salary as per industry standards. The competition in the field is high, but there is a rising demand for it.
Bookkeeping jobs are an excellent start for internships or short-term jobs. Bookkeeping candidates receive a decent salary, and the competition for entry-level jobs is less. Many choose bookkeeping as a potential work experience-gaining job while preparing for higher studies or competitive examinations.
Conclusion
Choosing the right career in finance can be confusing. Examining the different job roles, eligibility criteria, and required qualifications is necessary to decide the right profession. You can start your career by enrolling in the right finance course.
Imarticus Learning’s Certified Management Accountant (CMA) course in accounting, financial, and business analytics domains is the perfect choice for aspiring accountants. It comes with pass protection that ensures students pass the CMA exam. Imarticus charges 50% of the total fee after passing the examination. The course provides unlimited access to study materials, practical projects, and expert mentoring.
Book your seats today, or visit Imarticus Learning for more.
