Our Blog

Accounting v/s Bookkeeping

In order to manage your finances and make sound business decisions you are first required to have a proper understanding of your financial position. This understanding can be achieved through accounting as it helps us to understand the financial status of a person or organization.

The process of accounting is said, by many, to be “an art as well a science”. It is a science because it follows certain principles, and requires a systematic and logical approach. On the other hand, it qualifies as an art as it requires a sound understanding of all the different components and requires knowledge to classify the data and make sense of it – painting pictures with numbers if you will. This requires a certain amount of training. It is very simple when you get to understand it properly, but guidance is important to understand the techniques, so that you are well versed with the system.

In the modern business realm, people maintain accounts on computers because it is easier, cost effective, saves space and time. Accounting has legal importance in a court of law, therefore it is essential to be careful with the recording of data or else you could find yourself in trouble. Sound accounting practices also help you pay the right amount of tax, failing which, you could get pulled up and fined by the IRD therefore it is in a business’ best interest to hire a professional or use a professional accounting software that they are familiar with.

There is a small difference between accounting and bookkeeping. With accounting, the financial data is interpreted but in bookkeeping the primary concern is recording of the transactions. This makes bookkeeping slightly easier than accounts, however your accounting reports and your understanding of the business will only be as good as the books kept i.e. If you have shoddy bookkeeping practices or aren’t recording entries correctly, then the integrity of your accounting will suffer. MYOB and Xero make both bookkeeping and keeping track of accounts easy. After looking at your business as a whole, we will analyse, suggest and implement processes that will help you get the most out of your software as well as give you the best idea of what all the numbers are actually telling you.