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.
The accounting cycle consists of several steps that occur during the accounting period. This is often one month long, however, smaller companies can use longer accounting periods. The accrual method is most commonly used and is preferred by the IRS. The other option is the cash method, which does not match business transactions in the period in which they occur.
Accrual is often the most accurate method, at least on paper. It can be deceiving without the associated statements to show cash flow, owner's equity, and profit and loss. A company can actually be profitable on paper but be cash poor. If someone owns or manages a company, they need to know how to understand and interpret financial statements.
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 bookkeeper first analyzes all of the business transactions and determines what accounts they affect. They will then journalize all transactions in the general journal, or special journals, if needed. The third step is to post to the ledgers, be it the general ledger or subsidiary ledgers. If the bookkeeper works with an accountant, the accountant will often finish out the cycle, including a trial balance and financial statements. The accountant also has the job of interpreting the financial statements and conveying this information to 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 can also be in charge of office supplies and equipment. Part of that job is monitoring inventory levels and replenishing supplies as needed. They might also have authority to purchase copiers, computers, printers, and other items vital to the health of an office.
Bookkeepers have a lower level of education than an accountant or CPA. They usually have an Associate's degree and are well versed in accounting principles, known as GAAP (which stands for Generally Accepted Accounting Principles.) Business experience can also take the place of education. They must be fastidiously organized and detail oriented. A good bookkeeper is vital to the success of any company, large or small.
The accounting cycle consists of several steps that occur during the accounting period. This is often one month long, however, smaller companies can use longer accounting periods. The accrual method is most commonly used and is preferred by the IRS. The other option is the cash method, which does not match business transactions in the period in which they occur.
Accrual is often the most accurate method, at least on paper. It can be deceiving without the associated statements to show cash flow, owner's equity, and profit and loss. A company can actually be profitable on paper but be cash poor. If someone owns or manages a company, they need to know how to understand and interpret financial statements.
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 bookkeeper first analyzes all of the business transactions and determines what accounts they affect. They will then journalize all transactions in the general journal, or special journals, if needed. The third step is to post to the ledgers, be it the general ledger or subsidiary ledgers. If the bookkeeper works with an accountant, the accountant will often finish out the cycle, including a trial balance and financial statements. The accountant also has the job of interpreting the financial statements and conveying this information to 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 can also be in charge of office supplies and equipment. Part of that job is monitoring inventory levels and replenishing supplies as needed. They might also have authority to purchase copiers, computers, printers, and other items vital to the health of an office.
Bookkeepers have a lower level of education than an accountant or CPA. They usually have an Associate's degree and are well versed in accounting principles, known as GAAP (which stands for Generally Accepted Accounting Principles.) Business experience can also take the place of education. They must be fastidiously organized and detail oriented. A good bookkeeper is vital to the success of any company, large or small.
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