The Differences between a Bookkeeper and an Accountant: A Review
By Indeed Editorial Team
Updated September 29, 2022 | Published June 21, 2021
Updated September 29, 2022
Published June 21, 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Related: A Day in the Life of an Accountant
In this video, we follow Ektaa, a tax accountant working for a family-owned accounting firm, as she shares the skills and education needed to be a successful accountant.
In the world of financial support, there are bookkeepers and accountants. Both offer valuable skills to any organization and support a company or individual's financial health and goals. In this article, we discuss the critical differences between a bookkeeper and an accountant, focusing on the duties, qualifications, and skills.
What is the difference between a bookkeeper and an accountant?
Both a bookkeeper and an accountant are wonderful careers for those who enjoy working with numbers, math, and financial practices. Both careers provide financial support and often work closely together to bring a company or individual closer to their financial goals. And both jobs utilize accurate, thorough, and well-organized information. But there are two main differences between the two positions. The first key difference is that each position works within different steps of the financial reporting process. The second difference is that each position works with varying elements of finance.
A bookkeeper records, organizes, and manages the daily financial data and transactions of a company or individual. On the other hand, an accountant analyzes, interprets, and summarizes the financial information that a bookkeeper organizes and records. They then provide advice and insight to the company or individual to make better financial decisions. The work of a bookkeeper is transactional in nature and straightforward, with little room for interpretation. The work of an accountant, in contrast, is deeply analytical and subjective, looking for patterns in expenses and forecasting financial outcomes.
Duties of a bookkeeper
Depending on the company, industry, and position, the duties of a bookkeeper will differ slightly. Still, they will strongly emphasize financial administrative and clerical tasks, such as organizing receipts and data entry. Below is a concise description of the primary duties most bookkeepers perform:
Recording every financial transaction in the general ledger by completing journal entries
Recording income and account payments and depositing cash into the bank
Organizing purchase receipts and invoices and managing both accounts payable and receivable
Processing reimbursement requests and expense reports
Calculating basic tax deductions and preparing for GST filing and submittal
Managing payroll accounts and processing payroll for employees, including income tax, CPP, and EI deductions
Ensuring all financial records meet provincial and federal documentation requirements
Producing regular financial reports, such as an income statement, balance sheet, and cash flow statement
Managing bank account reconciliations every month
Duties of an accountant
Because much of the data entry of the financial transactions is completed by a bookkeeper, it allows an accountant to spend most of their time on high-level analysis, financial reporting, and providing advice and guidance. While a bookkeeper focuses on completing consistent transactions, an accountant can then analyze those transactions to make educated financial decisions. Below is a concise description of the primary duties most accountants perform:
Producing regular financial reports, such as an income statement and balance sheet, if not completed by a bookkeeper
Analyzing expenses and suggesting cost-savings opportunities or ways to increase deduction limits
Filing year-end provincial and federal tax returns and supporting any audit requests
Forecasting the outcome and impact of financial decisions, such as expansions, capital asset purchases, or investments
Ensuring the company or individual is compliant with all tax laws and regulations
Adjusting incorrect or improperly coded journal entries
Assisting with financial budgets, tax planning, and financial management advice
Managing accuracy and validity of bookkeeping systems and procedures
Creating economic models based on various situations and criteria
Specialization of a bookkeeper and an accountant
Another area that makes a bookkeeper different from an accountant is the area of specialization. Due to the transactional nature of a bookkeeper's tasks and responsibilities, they do not specialize in a particular field. The day-to-day environment of a bookkeeper is similar throughout all industries and types of business. In contrast, an accountant may focus on a specific area of accounting that requires specialized knowledge and experience. Here are several areas of accounting specialties:
Forensic accountants, focusing on financial misconduct, false financial reporting, and tax evasion
Investment accountants, focusing on the management and financial reporting of investment portfolios
Staff accountants, focusing on company financial accounting under the direction of a controller or chief financial officer
Project accountants, focusing on the beneficial financial outcome within project management
Government accountants, focusing on government financial reporting within all areas of government levels
Cost accountants, focusing on calculating the cost of products or manufacturing processes
Management accountants, focusing on accounting practices to provide companies with reliable financial information
Auditors, focusing on ensuring financial documentation and regulatory compliance within organizations
Qualifications of a bookkeeper and an accountant
Each career's educational requirements and qualifications are quite different and match the level of knowledge and experience that permits them to complete their jobs. It's interesting to note that an accountant can also be a bookkeeper, but a bookkeeper cannot call themselves an accountant. Below are the specific education and experience qualifications required for each position:
Because a bookkeeper has a high level of oversight and usually works closely with the business owner or accountant, clerical experience with attention to detail and the ability to provide accurate data entry is often acceptable for work experience. Understanding the basic principles of accounting, such as debits and credits, accounts payable, accounts receivable, and other functions, is required. A bookkeeper typically doesn't require any formal education, although many companies may desire a certificate or diploma in bookkeeping, which can significantly benefit your candidacy.
And while the bookkeeping profession in Canada is currently unregulated, it is worth noting that a bookkeeper in Canada can apply to become a Certified Professional Bookkeeper (CPB) through the Certified Professional Bookkeepers of Canada to designate your experience and knowledge in your profession.
An accountant, in contrast, requires more formal academic training due to the nature of the analysis and forecasting their position requires them to complete. An accountant typically has a minimum of a four-year university bachelor's degree in business administration, finance, or other related fields. Depending on the organization, they may require a certain amount of experience working as a junior accountant or under the direct supervision of a controller or head accountant.
Many accountants will continue their academic studies to receive a master's degree to specialize their accounting knowledge. The highest level of accounting designation in Canada is accreditation as a Chartered Professional Accountant (CPA) through the Chartered Professional Accountants of Canada. This ranking requires several years of additional training and on-the-job work experience.
Skills of a bookkeeper and an accountant
The skills and competencies of a bookkeeper and accountant overlap, and both use similar skills in different situations. Below are six common skills to both bookkeeping and accounting:
Attention to detail
Attention to detail and accuracy are vital when dealing with numbers, costs, and financial data. A bookkeeper must have a critical eye to ensure general ledger coding is correct and bank reconciliations are accurate to the penny. An accountant must notice small changes or patterns in financial records that can impact the financial health of an organization over the long term.
Effective communication is critical to success in both positions, specifically written communication. A bookkeeper must have a firm grasp of the English or French language to understand invoices, accounting records, and other financial documentation. An accountant must be equally proficient in written communication, as they are often involved in financial reports and presentations to company stakeholders. Clear communication provides clear financial information.
Most companies and organizations use computerized accounting practices, whether on a Microsoft Excel spreadsheet or a third-party accounting software program. A bookkeeper must be comfortable using computer systems to record financial transactions. And an accountant uses these programs to look at the information to provide analysis and advice. Being competent in basic computer literacy is vital to the success of both professions.
The fundamentals of accounting and bookkeeping are mathematics. Being able to add, subtract, multiply, and divide are cornerstones to accounting transactions. Both professions must be competent in basic math and perform more advanced calculations when handling investments, taxes, or other more complex transactions.
Both a bookkeeper and an accountant require a high level of organization in their professional life. Managing receipts, transactions, records, and statements requires knowing where the information is and how to locate it quickly and efficiently. Organizational skills also support effective time management and the ability to prioritize.
Problem-solving is a practical and valuable skill for both professions. A bookkeeper needs to use problem-solving skills to fix journal entry discrepancies, find missing data to complete a bank reconciliation, and handle late invoices or accounts receivable payments. An accountant uses problem-solving skills when analyzing financial data to forecast an expansion, determine the best tax savings for a business, or develop cost-savings measures.
Please note that none of the companies, institutions or organizations mentioned in this article are affiliated with Indeed.
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