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.
Bookkeepers usually perform the first three steps in the cycle, the latter steps are often the accountant's responsibility, but there can be some crossover, especially in some small businesses. Sophisticated accounting software has made it easier for almost anyone to create financial statements and perform analysis. However, those with little business savvy may want to leave this to the pros.
The first step in the cycle is to analyze each business transaction. Most transactions involve an exchange of money or credit. Then, these are journalized in the general journal and sometimes special journals, such as cash payments. Once journalized, they are posted in the general ledger or other subsidiary ledgers. The accountant will then take over and complete the cycle, which includes a worksheet, a trial balance, and the associated financial statements. The accountant or CPA is also tasked with interpretation of the financials and communication with 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 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.
They often have a lower educational level than that of an accountant. An Associate's degree may be required if there is not considerable business experience. They must be familiar with the accepted accounting principles and often have some knowledge of tax law, especially if they deal with payroll. They must be detail oriented and organized. A great bookkeeper can be invaluable to any company, big 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.
Bookkeepers usually perform the first three steps in the cycle, the latter steps are often the accountant's responsibility, but there can be some crossover, especially in some small businesses. Sophisticated accounting software has made it easier for almost anyone to create financial statements and perform analysis. However, those with little business savvy may want to leave this to the pros.
The first step in the cycle is to analyze each business transaction. Most transactions involve an exchange of money or credit. Then, these are journalized in the general journal and sometimes special journals, such as cash payments. Once journalized, they are posted in the general ledger or other subsidiary ledgers. The accountant will then take over and complete the cycle, which includes a worksheet, a trial balance, and the associated financial statements. The accountant or CPA is also tasked with interpretation of the financials and communication with 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 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.
They often have a lower educational level than that of an accountant. An Associate's degree may be required if there is not considerable business experience. They must be familiar with the accepted accounting principles and often have some knowledge of tax law, especially if they deal with payroll. They must be detail oriented and organized. A great bookkeeper can be invaluable to any company, big or small.
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