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.
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 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.
Someone who keeps the books may have other related duties as well. They could be involved in reconciling bank statements, paying invoices, or billing customers. They might be in charge of a petty cash fund, make bank deposits, and could even process payroll. They will also have considerable input to how money is budgeted and spent.
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.
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.
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 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.
Someone who keeps the books may have other related duties as well. They could be involved in reconciling bank statements, paying invoices, or billing customers. They might be in charge of a petty cash fund, make bank deposits, and could even process payroll. They will also have considerable input to how money is budgeted and spent.
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.
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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