BOOK-KEEPING

Bookkeeping is the process of recording daily transactions in a consistent way, and is a key
component to gathering the financial information needed to run a successful business.
Bookkeeping comprises of:
 Recording financial transactions
 Posting debits and credits
 Producing invoices
 Preparation of financial statements (balance sheet, cash flow statement, and income
statement)
 Maintaining and balancing subsidiaries, general ledgers, and historical accounts
 Completing payroll
Maintaining a general ledger is one of the main components of bookkeeping. The general ledger
is a basic document where a bookkeeper records the amounts from sale and expense receipts.
This is referred to as posting. The more sales that are completed, the more often the ledger is
posted. A ledger can be created with specialized software, a computer spreadsheet, or simply a
lined sheet of paper.
The complexity of a bookkeeping system often depends on the size of the business and the
number of transactions completed daily, weekly, and monthly. All sales and purchases made by
your business need to be recorded in the ledger, and certain items need supporting documents.
The IRS lays out which business transactions require supporting documents on their webs

ACCOUNTING
Accounting is a high-level process that uses financial data compiled by a bookkeeper or business
owner to produce financial models.
The accounting process is more subjective than bookkeeping, which is largely transactional.
Accounting comprises of:
 Preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded
in the bookkeeping process)
 Reviewing company financial statements
 Analyzing costs of operations
 Completing income tax returns
 Aiding the business owner in understanding the impact of financial decisions

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A key part of the accounting process is analyzing financial reports to help you make business
decisions. The result is a better understanding of actual profitability and an awareness of cash
flow in your business. Accounting turns the information from the general ledger into insights that
reveal the bigger picture of the business, and the path the company is progressing on. Business
owners will often look to accountants for help with strategic tax planning, analysing their
financial position, forecasting, and tax filing.

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BOOKKEEPER VS. ACCOUNTANT RESPONSIBILITIES

Bookkeeper Accountant
Prepares and files corporate tax
Recording journal entries
returns
Conducting bank reconciliations Reviewing financial statements
Look for errors in budgets and invoices account
Performing account analysis
analysis
Recording daily/monthly transactions Conducting routine audits

Some Ethical Issues faced by accountants include:

1. Misleading or inaccurate reporting, including inaccuracy, incompleteness and

questionable re-categorisation
2. Fraud and tax evasion
3. Lack of transparency in accounting decisions
4. Breaches of confidentiality
5. Misrepresenting expertise
6. Overcharging fees or over-servicing clients
7. Bribery

The main sources or causes of these ethical issues were

1. Pressure from the client

2. Conflict of interests
3. Pressure from the employing organisation’s management or leadership.

Some responses to unethical practices include:

1. Saying ‘no’ to external pressures

2. Seeking advice
3. Educating either fellow professionals or clients.

The dominant criteria for determining whether an issue is of an ethical nature were:

1. Accuracy and correctness

2. Justice (fairness) and impartiality
3. Completeness and transparency
4. Negative effects or consequences, mostly on the integrity of the profession and on clients.