By Innovation-SA on February 10, 2021 in Business
Accounting is how the financial reports are documented, compiled, reviewed, consulted, and informed on, whereas bookkeeping is regularly tracking transactions to create an efficient organization. Bookkeeping involves writing invoices, preparing the payroll, entering amounts debited and credited, all while maintaining the general ledger, a key element in bookkeeping. What’s more, accounting is all about forecasting financial trends, business growth, analyzing and verifying data about the finances, carrying outing audits, and preparing all the files which include the business activities and financial performance of a company. While both of them complement each other, accounting and bookkeeping are separate departments. To a layperson, the two terms may mean the same thing. However, several striking variations exist that set them apart from each other. Here’s what you should know when choosing one of the most reliable accounting firms in Saudi Arabia.
There is the single-entry and double-entry bookkeeping. By definition, single-entry refers to documenting transactions against one category. This can fall under either the expenses account or income account. A good illustration of single-entry can be seen in a cashbook. Double-entry bookkeeping, however, entails transactions that are documented against two aspects. However, the accounting department uses the double-entry method, where a transaction is debited to one and credited on another.
Accounting’s primary aim is to keep up legitimate and precise records of every monetary exchange, while the one handling bookkeeping measures the financial condition and provides the appropriate authority with substantive details. Accuracy in bookkeeping is paramount, in addition to ensuring all the data entered is up to date. Meanwhile, an accountant is responsible for ascertaining loss or profits, measuring whether the business is making losses or profits, depicting the business entity’s financial status, and providing accurate accounting information when needed.
Understanding Who Takes The Decision
Irrespective of the information provided by the bookkeeper, the management’s decision cannot be based on it. Any decision made by the senior staff mainly depends on the accountant’s evidence. They play a significant role when it comes to decision-making.
There is no financial reporting during bookkeeping. In accounting, though, it is compulsory to prepare financial reports, which is done via fundamental statements. The reports entail income statements, balance sheets, cash flow reports, and shareholder’s equity statements.