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ACCOUNTING AND BOOK KEEPING

 

Accounting is the foundation of any business; our accountant is experienced and very much qualified to deal with your prerequisites. Bookkeeping is a craft of recording exchanges of money related nature on everyday premise on a sequential premise; each business must get ready and keep up an exceptional book of records, which is a prerequisite of law just as cutting edge need to conform to burden laws. The size of the business doesn't make a difference, and the legitimate compliances are appropriate in a similar way to all. The instalment of advance expenses, TDS and GST depends on the best possible bookkeeping of the business.


ACCOUNTING AND BOOK KEEPING


What is Accounting?


Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. The financial statements used in accounting are a concise summary of financial transactions over an accounting period.

How Accounting Works


Accounting is one of the key functions for almost any business. It may be handled by a bookkeeper or an accountant at a small firm, or by sizable finance departments with dozens of employees at larger companies. The reports generated by various streams of accounting, such as cost accounting and managerial accounting, are invaluable in helping management make informed business decisions.

KEY TAKEAWAYS


1. Regardless of the size of a business, accounting is a necessary function for decision making, cost planning, and measurement of economic performance measurement.

2. A bookkeeper can handle basic accounting needs, but a Certified Public Accountant (CPA) should be utilized for larger or more advanced accounting tasks.




Key Point on Accounting of Your Business


Place of Maintaining Account


Book of Account is to be maintained at Registered Office of the company or LLP. The board of directors may decide to keep and maintained the books of account at any other place in India. However, such a decision must be intimated to the ROC in Form No. AOC 5 within seven days. in case of LLP, the books must be maintained at the registered office of the LLP.

Finalisation of Accounts & Audit


At the end of the financial year, final accounts need to be prepared which results in the profit and loss account and the balance sheet for the fiscal year. Any LLP, whose turnover does not exceed, in any financial year, forty lakh rupees, or whose contribution does not exceed twenty five lakh rupees, is not required to get its accounts audited

Documents Necessary for Accounting & Tax


• Invoices/Bills raised during the month.
• Purchase Bills or Invoices.
• Sale or Purchase Returns.
• Debit and Credit Notes.
• Detailed Statement of all Bank Accounts.
• Cash Book with vouchers and evidence.
• Any other information of financial nature.





Types of Accounting


Financial Accounting


Financial accounting refers to the processes used to generate interim and annual financial statements. The results of all financial transactions that occur during an accounting period are summarized into the balance sheet, income statement, and cash flow statement. The financial statements of most companies are audited annually by an external CPA firm.

Managerial Accounting


Managerial accounting uses much of the same data as financial accounting, but it organizes and utilizes information in different ways. Namely, in managerial accounting, an accountant generates monthly or quarterly reports that a business's management team can use to make decisions about how the business operates.

Cost Accounting


Just as managerial accounting helps businesses make decisions about management, cost accounting helps businesses make decisions about costing. Essentially, cost accounting considers all of the costs related to producing a product.
In Other Words Cost accounting is defined as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail.




BOOK KEEPING

Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, including the single-entry and double-entry bookkeeping systems. While these may be viewed as "real" bookkeeping, any process for recording financial transactions is a bookkeeping process.

Bookkeeping is the work of a bookkeeper (or book-keeper), who records the day-to-day financial transactions of a business. They usually write the daybooks (which contain records of sales, purchases, receipts, and payments), and document each financial transaction, whether cash or credit, into the correct daybook—that is, petty cash book, suppliers ledger, customer ledger, etc.—and the general ledger. Thereafter, an accountant can create financial reports from the information recorded by the bookkeeper.

Bookkeeping refers mainly to the record-keeping aspects of financial accounting, and involves preparing source documents for all transactions, operations, and other events of a business.
The bookkeeper brings the books to the trial balance stage: an accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.



DIFFERENCE BETWEEN ACCOUNTING AND BOOK KEEPING

Bookkeeping Accounting
Definition Bookkeeping is mainly related to identifying, measuring, and recording, financial transactions Accounting is the process of summarizing, interpreting, and communicating financial transactions which were classified in the ledger account
Decision Making Management can't take a decision based on the data provided by bookkeeping Depending on the data provided by the accountants, the management can take critical business decisions
Objective The objective of bookkeeping is to keep the records of all financial transactions proper and systematic The objective of accounting is to gauge the financial situation and further communicate the information to the relevant authorities
Preparation of Financial Statements Financial statements are not prepared as a part of this process Financial statements are prepared during the accounting process
Skills Required Bookkeeping doesn't require any special skill sets Accounting requires special skills due to its analytical and complex nature
Analysis The process of bookkeeping does not require any analysis. Accounting uses bookkeeping information to analyze and interpret the data and then compiles it into reports
Types Basically there are two types of bookkeeping - Single entry and double entry bookkeeping. The accounting department does preparations of a company's budgets and plans loan proposals.