Am I an Accountant or a Bookkeeper? What is the difference?

This is a common question I hear from individuals performing day-to-day financial services for a company.

Most people, even accountants, don't know the answer to this question. And, in most cases the answer doesn't matter. But, in those cases where someone wants to be technically correct the answer lies in what services a person performs. If a person is doing bookkeeping, they are a bookkeeper. If they are doing accounting, they are an accountant.

What is Bookkeeping?

There are eight steps to the bookkeeping cycle. A bookkeeper is a person that performs one or more of these steps. In large companies, for instance, the bookkeeping cycle might be divided into departments such as Accounts Receivable, Accounts Payable, or Payroll. While most often these people are referred to as "clerks", they might also be considered bookkeepers as they are "keeping the books" for a company. In small companies, the bookkeeper may perform the entire bookkeeping process, or might just enter data to give to the "accountant".

All bookkeeping steps are mechanical in nature. Bookkeeping is a regimented process usually occurring in monthly cycles consisting of entering transactions into the journals, making adjustments, and preparing reports. The Accounts Receivable Clerk may be assigned to enter all sales on account, and all payments from the customers. The Accounts Payable Clerk's responsibility would be to enter purchase orders and checks. Again, in a small company, both duties may be performed by the same person.

The full-charge bookkeeper is someone who can do it all - including compiling the data into the General Ledger and preparing financial statements.

What is Accounting?

Someone has to set up the bookkeeping system, monitor it, and interpret the results. These processes are called "Accounting." The accounting process is much less mechanical and more subjective. It begins with designing a system that will benefit the business, by capturing the financial information in a useful manner without being overly burdensome to the bookkeeper. Once set up, the accountant monitors the system to ensure it's doing what it's suppose to do. And finally, on a monthly basis usually, the accountant presents the financial statements to the business management in such a way that decisions can be made.

Since accounting requires an understanding of the bookkeeping process, accountants typically supervise the bookkeepers. In a large corporation there may be several, possibly even thousands of accountants. One will be designated as the "Controller" who oversees the entire accounting and bookkeeping system.

In a small business, one person, often a freelancer (a contract accountant) will perform all the phases of accounting and bookkeeping for a company. Since "Accountant" is the more prestigious title, most small business jack-of-all-trades call themselves an "Accountant".

It merits some note that a few states actually regulate the use of the title "Accountant". In these states, the "Accountant" title is reserved for CPA's only. This does not necessarily coincide with the definition of an accountant since most CPA's don't perform the role of an "Accountant" as described above and many people that perform the accountant's roles are not CPA's. Nevertheless the laws define it as such.

Universal's course trains in bookkeeping and accounting. The first module, Accounting Made Easy, emphasizes the bookkeeping process, although it does address the proper setup of the accounting system. Modules two, Practical Small-Business Application, and three, Advanced Accounting, include some bookkeeping practice, but emphasize the set up and interpretation of the accounting process. The forth module, Building a Successful Accounting Service, is to assist you in successfully creating your own professional in-home, or office-based bookkeeping and accounting service.

Therefore, most of our graduates, in states that permit use of such a title, refer to themselves as "Accountants".

What about Tax Preparers?

Although I often hear tax preparers being called Accountants, technically speaking they are not. In the early 1900s accountants usually filled out the relatively simple forms as one of their duties. Today, with the tax preparation industry becoming a specialty all its own and the tax laws becoming increasingly complex, tax preparation is a totally different field populated by thousands of individuals that have never performed bookkeeping or accounting. Most are educated individuals who know how to organize tax data and how to enter it on the tax forms. Their title is "Tax Preparer".

Of course, there are those, including a fraction of CPA's, who do perform all three tasks. Again, because "Accountant" is the most recognized title, it's the one of choice by most such professionals.

Bookkeeping Training and Accounting Training are Different

Bookkeepers have always held vital positions within the companies they work for. They verify and balance receipts, post debits and credits, and record transactions. Some Bookkeepers have offices in their own homes and make extra money in addition to their regular salary. Newspaper ads regularly appear for payroll clerks, accounts receivable and payable clerks, and Bookkeepers for large and small companies.

Bookkeeping is the language of business, and no matter what your occupation, it is important to learn accounting and learn bookkeeping. To understand what type of training is necessary to become proficient at bookkeeping, consider the differences in accounting and bookkeeping courses.

What will you learn in an Accounting Training program?

Accounting training is instruction in setting up a financial tracking system, monitoring the data-entry process for financial transactions, and the interpretation of financial statements for management. Although the accounting process is the same in theory, it's much different in practice when applying it to small and large companies. For instance, the accountant in a large company is most often a financial analyst, reviewing the results of operations, interpreting the results, and presenting information to management.

Small businesses, on the other hand, need someone that can set up a system that will fit their needs, then ensure the data is entered correctly, and finally consult on ideas and strategies that will improve the bottom line.

The problem with many accounting courses

Most accounting training programs and accounting courses, cater to the large business in developing their curriculum. The primary objective of the degree programs is to teach auditing, management and public reporting or financial results. Little of the training is concerned with proper set up of the accounting records and accounting basics. Furthermore, day-to-day processes have been all but eliminated from the four year and six year curriculums. The emphasis has become analysis of the end product.

This has created an opportunity for Universal Accounting Center to fill that need for small businesses. Curriculum at Universal emphasizes the setup of the accounting system to fit the business needs, monitoring of the actual data entry process, and final interpretive consulting to the business owner. Universal demonstrates throughout the course material how to perform each task and allows the student to experience it him or her self.

Bookkeeping training is different

Bookkeeping is the daily process of recording financial transactions of a business. It includes the maintenance of Accounts Receivable, Accounts Payable, and Payroll accounts and working with specialty journals. As nearly 90% of all businesses have fewer than 20 employees, there is a good chance that the accountant will also be performing the bookkeeping role for a company.

Although not as technically taxing, bookkeeping still requires knowledge of debits and credits, proper distribution of accounts, and how to research problems. Bookkeeping training must be hands-on to ensure that the student understands not only the purpose of what is being done, but how to do it.

The Universal Accounting bookkeeping courses are perfect for learning the entire process. Students get focused small business bookkeeping training and will complete the entire sets of books for nine different businesses, in different industries.

Courses are available at their US accounting training campuses, or through distance-learning. The training consists of four modules, each containing DVD format media. Each of the accounting courses and bookkeeping courses provides the student with specific experience in various phases of the accounting cycle. The accounting courses were created in an actual class environment with students and instructor.

Universal has found this media format to be an improvement over online accounting courses by permitting the student to view the class as many times and at whatever time is most convenient and needed. A person can view the course from wherever he or she will be, without the need for an Internet hookup.