Accounting, which takes place within the more comprehensive category of accounting, is a different process from bookkeeping. The information produced by bookkeeping is used to prepare the accounts. To advance the company, these two functions must have a solid working relationship. A component of the entire accounting system is bookkeeping.
Since bookkeeping comprises accurate records of all financial transactions, it serves as the foundation for accounting, which organizes, summarizes, categorizes, and reports financial transactions. The Accounting and bookkeeping company in abudhabi of a corporation will be correct if the bookkeeping is accurate. Consequently, accountancy encompasses more than just bookkeeping, and the accounting of a business depends on efficiency.
A brief note about the objective of bookkeeping
To record the transaction
The primary goal of Accounting and bookkeeping company in abudhabi is to keep accurate, thorough, and organized records of all financial activities. It guarantees that all financial transactions are recorded systematically and are represented in the books of accounts. These transactions may be referred to in the future.
To show the correct position
Bookkeeping assists in determining the overall effect of a company’s financial transactions. It displays the financial impact of each business transaction that has occurred during a fiscal year. It offers financial data to the company’s shareholders and management, nazing assisting in the development of upcoming plans and policies.
To detect errors and fraud
A systematic chronological summary of the transactions is made possible by bookkeeping. It ensures that the books of accounts are accurate, current, sequential, and complete. As a result, it aids in identifying any mistakes or frauds in the industry.
Difference between accounting and bookkeeping
- The systematic recording and classification of a company’s financial transactions are known as bookkeeping.
- The foundation of accounting is believed to be bookkeeping, although accounting is a subset of finance as a whole.
- The basic goal of bookkeeping is to keep an accurate account of all financial transactions made by a company.
- Major investment decisions are made by companies using this information.
- The bookkeeper keeps track of the books. For a business, accurate bookkeeping is essential because it provides accurate data on how well a company is performing.
- Accounting is the methodical process of documenting, evaluating, and disseminating data regarding financial transactions occurring in a firm.
- Accounting assists in determining a company’s financial situation and communicating it to stakeholders.
- It aids a firm in both short- and long-term decision-making and also communicates to the market the legitimacy of a company.
- It is sometimes referred to as the business language.
- Users of accounting, such as investors, creditors, employees, and the government, are intended to have a clear understanding of the financial statements.
List out the type of bookkeeping system
Single-entry system of bookkeeping – The single-entry system of bookkeeping is a fundamental method for generating a weekly or daily report of a company’s cash flow or for recording daily receipts. Each financial transaction or activity is represented by a single entry in the single-entry system of bookkeeping.
The double-entry system of bookkeeping – Every financial activity or transaction is recorded using the double-entry accounting method as a double entry. Because it records a corresponding credit entry for each debit entry, the double entry system offers checks and balances.
Multiple laws contain legal provisions concerning the upkeep of economic statements and books of accounts. The laws that govern them require that banks, businesses, and insurance organizations support and keep financial records. Therefore, bookkeeping is required for such businesses.