The difference between accounting & bookkeeping in Singapore
3 minute read
The difference between bookkeeping and accounting can be likened to the difference between a nurse and a doctor. Both the bookkeeper and accountant work towards the same objectives. And while some of their functions may overlap, they have varying areas of responsibility.
To an untrained eye, bookkeeping and accounting may appear to be the same profession and are often used interchangeably by most people. Obviously, both accounting and bookkeeping in Singapore involves working with financial data, requires having basic accounting knowledge, and deals with preparing and generating reports.
While all these processes may be inherently different, each of these has its own set of advantages. And if you’re a business owner, knowing the difference between bookkeeping and accounting can definitely help you understand the key roles the two processes have in growing your company.
Bookkeeping: Recording and filing
Aimed at consistently keeping the business/company records of all financial transactions in order, proper, and organized, the administrative task of bookkeeping refers to the process of identifying, measuring, and recording financial transactions on a daily basis and in a consistent manner.
Considered as the first step in accounting, bookkeeping involves preparing the payroll, creating invoices, posting debits and credits, reconciling company credit cards, among others. The bookkeeper is responsible for updating inventories, handling petty cash, paying suppliers, and filing customers’ cash receipts.
While the management cannot make important business decisions based on the data provided by bookkeeping, it is critical that bookkeepers are accurate in their work and are fully knowledgeable about financial topics with their roles and responsibilities.
And because bookkeeping in Singapore involves balancing the company’s ledgers, subsidiaries, and historical accounts where the sales and expenses are recorded along with other supporting documents, becoming a bookkeeper requires one to take accounting courses to learn the fundamentals of accounting.
Accounting: Analysing and reporting
With the main objective of gauging the business’s financial situation and further communicating the same information to relevant management authorities, the middle-level management task of accounting refers to the process of summarizing, analysing and interpreting, and reporting financial transactions that were classified in the ledger account.
With the preparation of financial statements involved in the accounting process, the role of the accountant includes accruing or deferring expenses and revenue, analysing and interpreting the company’s operational expenses, filing taxes and other regulatory payments, preparing financial statements and reports. Business owners and relevant management personnel rely on these reports that largely influence financial decisions that they have to make to ensure the stability and growth of the business.
Due to its complex and analytical nature, accounting requires special skills to enable accountants to draw up charts of the business’s accounts, outline the company’s budget, or create winning loan proposals. Professional accountants set the business parameters and standards that includes filing, maintaining, and even destroying financial records when deemed necessary.
To become a Certified Public Accountant or Chartered Accountant of Singapore, one must first earn a bachelor’s degree and pass the board exam. A professional accountant may also work as a company’s financial controller or hold comptroller positions in the business.
The shifting landscapes
Having been in existence for quite a long time now, both bookkeeping and accounting have witnessed a tremendous degree of change and growth in the way the processes are carried out.
With the advent of bookkeeping and accounting software, the line between the two processes is slowly diminishing. With the technological developments brought about by the Information Age, some accounting functions are now being slowly absorbed into the bookkeeping process while generating financial statements that were earlier part of the accounting process can now be easily undertaken by bookkeeping software.
In fact, with most of the bookkeeping tasks going to be easily handled by bookkeeping software, the task of keeping the books in Singapore is deemed to become obsolete in the near future.
Save on your costs and time and be able to focus on your business by outsourcing your bookkeeping and accounting requirements to us. Contact us now to find out more!