Accounting & Bookkeeping

Accounting & Bookkeeping

Accounting and bookkeeping are related financial processes. Bookkeeping involves recording and organizing financial transactions, while accounting goes beyond that to interpret and analyze financial information. Bookkeeping focuses on accurate transaction recording, while accounting provides insights for decision-making. Both play essential roles in managing a business's financial activities.

Accounting & Bookkeeping2023-06-07T00:51:35-05:30

What is Accounting?

Accounting is the process of detecting, measuring, documenting, analysing, interpreting, and communicating financial information in a systematic manner. It entails summarising and reporting a company's or organization's financial transactions and operations. Accounting gives valuable insights into a company's financial health, performance, and position, assisting stakeholders in making educated decisions. It includes a variety of tasks such as financial statement preparation, budget management, auditing, and financial analysis and recommendations. Accounting, in general, is critical in monitoring, analysing, and presenting financial information to internal and external consumers.

What is Bookkeeping?

Bookkeeping is the systematic process of documenting, organising, and managing the financial transactions and information of a business or organisation. It requires using a double-entry system to correctly record and categorise each financial transaction, such as sales, purchases, costs, and payments. Bookkeeping ensures that all financial transactions are recorded accurately and assists to the development of a clear financial trail. By keeping accurate and up-to-date records, bookkeeping provides a solid foundation for financial analysis, decision-making, and the compilation of financial statements. It is crucial for monitoring a company's financial health, adhering to tax laws, and promoting effective financial management.

Process of Bookkeeping & Accounting

Bookkeeping and accounting comprise numerous critical stages that work together to maintain accurate financial records and provide useful insights into a company's financial health. The following are the general steps in the process:

  1. Bookkeeping and accounting both begin with the recording of financial transactions. Bookkeeping is the methodical recording and organisation of all transactions, including as sales, purchases, expenses, and payments, into proper journals or accounting software.
  2. Classifying and categorising: Using a chart of accounts, bookkeepers allocate each transaction to a corresponding account. This classification helps to organise financial data and makes analysis and reporting easier. Assets, liabilities, equity, revenue, and expenses are all examples of accounts.
  3. Bookkeepers enter categorised transactions into the general ledger, which acts as the central repository for all accounts. The general ledger keeps track of financial transactions by keeping a running balance for each account.
  4. A trial balance is prepared by bookkeepers to guarantee accuracy. This report includes all account balances and guarantees that debits and credits are equal. Before proceeding, any differences are recognised and remedied.
  5. Adjusting Entries: Adjusting entries may be performed at the conclusion of an accounting period to verify that revenues and expenses are appropriately reported. Accruals, prepayments, depreciation, and provisions are all accounted for in these entries.
  6. Accountants generate financial statements, such as the income statement, balance sheet, and cash flow statement, using data recorded by bookkeepers. These statements provide an in-depth analysis of the company's financial performance, position, and cash flow.
  7. Accountants analyse financial statements to acquire insights into the company's financial status, discover patterns, and evaluate performance. They evaluate data to assist stakeholders in making educated decisions and developing strategies.
  8. Accountants provide financial reports and statements for internal and external stakeholders including as management, investors, lenders, and tax authorities, among others. They guarantee that appropriate accounting concepts, standards, and regulations are followed.
  9. Accountants play an important role in financial management by advising on budgeting, forecasting, cost analysis, and investment decisions. They assist firms in optimising their financial resources and achieving their objectives.
  10. Accountants may conduct audits to ensure the accuracy and integrity of financial records. They ensure that accounting rules and regulations are followed, that possible risks are identified, and that stakeholders have confidence in the accuracy of financial information.

Years of experience







What documents should I keep for accounting and bookkeeping purposes?2023-06-06T04:33:15-05:30

Sales invoices, purchase invoices, receipts, bank statements, payroll records, expense receipts, contracts, financial statements, tax-related paperwork, and business licenses/permits are all important documents.

Do I need an accountant if I have a bookkeeper?2023-06-06T04:32:33-05:30

While a bookkeeper handles day-to-day recording and organizing of transactions, an accountant provides higher-level analysis, financial advice, tax planning, and helps with strategic decision-making.

How can bookkeeping software benefit my business?2023-06-06T04:31:57-05:30

Bookkeeping software automates and streamlines the bookkeeping process, eliminating errors, saving time, and allowing access to financial information in real time.

What is the difference between cash basis and accrual basis accounting?2023-06-06T04:31:03-05:30

Cash-based accounting documents transactions as they are received or paid in cash, whereas accrual basis accounting records income and expenditures as they are earned or spent, regardless of the flow of cash.

What is the purpose of adjusting entries in accounting?2023-06-06T04:30:10-05:30

At the conclusion of an accounting period, adjusting entries are performed to ensure that income and expenditures are appropriately reported, taking into account factors such as accruals and advance payments.

How often should I reconcile my bank statements?2023-06-06T04:29:23-05:30

Statements from banks should be reconciled on a regular basis, usually monthly, to ensure that reported transactions reflect real bank activity.

What is the role of financial statements in accounting?2023-06-06T04:28:10-05:30

Financial statements summarise a company's financial performance, position, and cash flow. Examples include the income statement, balance sheet, and cash flow statement.

What are the benefits of accurate bookkeeping?2023-06-06T04:27:15-05:30

Accurate bookkeeping gives information about a company's financial health, enables informed decision-making, and aids in reporting and analysing finances.

Why is bookkeeping important?2023-06-06T04:26:24-05:30

Bookkeeping is vital for keeping correct accounting records, monitoring transactions, and assuring compliance with taxes.

What is the difference between accounting and bookkeeping?2023-06-06T04:18:50-05:30

Accounting is concerned with evaluating and analysing financial data, whereas bookkeeping is concerned with recording and organising financial transactions.

Documents Required for Accounting & Bookkeeping

  1. Sales Invoices
  2. Purchase Invoices
  3. Receipts
  4. Bank Statements
  5. Payroll Records
  6. Expense Receipts
  7. Contracts and Agreements
  8. Financial Statements
  9. Tax-related Documents
  10. Business Licenses and Permits

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