• support@bizmanualz.com
  • Home
  • Contact Us
  • About Us
  • Help
  • My Account
Policies and Procedures Manual Template WordPolicies and Procedures Manual Template WordPolicies and Procedures Manual Template WordPolicies and Procedures Manual Template Word
  • Policy
    Procedure
    Manuals
    • CEO 9-Manual Set-45% Off
    • CFO 5-Manual Set-34% Off
    • Policy Procedure Software
    • Accounting Manual
    • Finance Manual
    • IT Policy Manual
    • HR Policy Manual
    • Sales Marketing Manual
    • ISO 9001 Quality Procedures Manual
    • AS9100 D Quality Procedures Manual
    • ISO 22000 Food Safety HACCP Manual
    • Production Operations
    • Medical Office Procedures
    • Nonprofit Procedures
    • Construction Procedures
  • Document
    Management
    Software
    • Product & Benefits
    • OnPolicy Software Overview
    • On-Policy – 30-Day Free Trial
    • Testimonials
    • Resources
    • Subscribe to OnPolicy
    • Software, Procedure Manual Bundle
    • OnPolicy Help Introduction
  • Free
    Procedure
    Samples
    • Free Sample Policies and Procedures Template
  • How To
    Business
    Articles
    • Save Time Writing Procedures
    • Write Better Policies
    • Writing Procedure Manuals
    • Write Better Procedures
    • Strengthen Your Financials
      • Set Better Objectives
      • Tighten Accounting Controls
      • Improve Company Governance
      • Simplify Compliance
    • Obtain ISO Certification
      • Make a Process Map
      • Implement ISO Quality
      • Improve Quality
      • Improve Management Systems
      • Increase Customer Satisfaction
      • Make Your Business Lean
    • Solve Business Problems
      • Organize Your Business
      • Improve Business Communication
      • Be a Better Boss
      • Empower Employees
      • Making Change Easier
      • Grow Your Business
      • Find Business Improvements
      • Improve Business Processes
      • Increase Innovation
      • Better Sales and Marketing
      • Better Project Management
    • Leverage Technology
      • Automate Policy Management
      • Improve Your Social Media
      • Increase Productivity
  • Lean ISO
    Consulting
    Training
    • Improve Your Training
    • Customer Testimonials
    • ISO 9001:2015 Classes | Internal Auditor Training | Virtual
    • ISO 9001:2015 Classes | Lead Auditor Training St Louis MO
    • ISO 9000 Help | Lean Consulting Training St Louis MO
    • ISO Writer | Writing Policies and Procedures Training Class
    • Lean Training Class St Louis MO
    • FREE Quality
      Audit* Offer
0

What’s the Difference Between Finance, Accounting and Bookkeeping?

Categories
  • Strengthen Your Financials
Tags
  • accounting
  • bookkeeping
  • reporting
Why Accounting Manual

The two important terms “accounting” and “bookkeeping” are easily confused. What are they, how do they interrelate, and how do they interface with accounting policies and procedures? First let’s define the terms.

What Is the Difference Between Finance, Accounting and Bookkeeping?

difference between finance and accountingBookkeeping

Bookkeeping and accounting share two basic goals:

  • To keep track of income and expenses, thereby improving The Company’s ability to achieve profitability
  • To collect the necessary financial information about The Company’s business to file required reports and tax returns

Bookkeeping refers to the actual transactional entering and recording of data. Examples are writing checks, processing payroll, making deposits, recording disbursements and recording receipts.

Accounting

Accounting encompasses the broader responsibilities over developing and maintaining the accounting system under which bookkeeping functions are performed and generally falls within the top ten job responsibilties of a CFO. Accounting is concerned with the timely and accurate recording of transactions, providing useful management information, and properly reporting such information for various user needs. Developing and maintaining an accounting system involves setting up and maintaining an appropriate chart of accounts for the particular business.

Accounting policies and procedures are then established to provide guidance and internal control for all possible financial transactions, from source documents (checks, sales orders, etc.), to journals (payroll journal, cash disbursement journal, invoice register, etc.), to the general ledger, (based on the chart of accounts), and ultimately to a variety of reports for all internal and external needs. Bookkeeping and reporting can be thought of as the input and output of a complete accounting system. Accounting manuals template ensure:

  • Integrity of the input data; and
  • Accuracy and validity of the output report.

Reporting

Reporting, (the output of the data generated through various bookkeeping functions), is used for both internal and external purposes. Internal Reports are reports used within the company, by both management and other designated personnel. Internal reporting can be further divided into non-financial and financial data.

Non-financial data

Non-financial data includes a variety of measurement and productivity data, applicable to the specific business. These can be daily customer count, web page “hits”, production activity per employee hour, units and total weight of product shipped, or even daily weather conditions.

Financial data

Examples of financial data reports include:

  • Financial statements – Profit and loss reports (income statement), balance sheets and cash flow statements
  • Daily reports with critical balances, such as, sales, cash level, inventory, accounts receivable and accounts payable
  • Segmented profit and loss reports (or P/L) on specific jobs, profit centers or departments
  • Register reports, listing all transactions for specific areas such as, payroll, checks, receipts, invoices, etc.
  • Listings of source data files such as customer, employee, vendor and inventory lists.
  • Aging reports for both Customers (accounts receivable or A/R) and Vendors (accounts payables or A/P)
  • Inventory reports for costing and valuation
  • Exception reports – open purchase orders, back orders, inventory stock outs.

External reports generated for the use of people or organizations outside of the business. Generally, one of the more important users is the Internal Revenue Service (IRS) and various state and local taxing authorities. Required income tax returns can be prepared more easily from financial reports that are classified in a comparable manner. A tax practitioner is usually retained to prepare and file these returns. The report most commonly requested of the company is the general ledger and related financial statements.

Financial report data and format will vary depending on user:

  • Banks, lending institutions. To observe the financial viability of a business and to determine its ability to support additional amounts and types of debt financing
  • Employees. To determine the stability of the business of their employer – this may be useful in wage negotiations
  • Suppliers. To assess the suitability of granting credit terms to a business
  • Existing and Potential Investors. To assess the potential risk of investing in a business and to monitor the status of existing investment in a business
  • Public. To gain more insight into any business, which is legally required to make certain financial information available
  • Government. To fulfill the requirements of all applicable local, state and federal reporting statutes, including income, sales, insurance, property, and payroll tax returns
  • Media / Press. To use available business reports in specific trade and business publications

What Is the Difference Between Finance and Accounting?

Most people lump finance and accounting together Although both finance and accounting revolve around the management of assets, they are actually both different. The easiest way to remember the difference between these two is to remember that finance is the planning of distributing the business’ assets, and accounting is the recording and reporting of the financial transactions.

Accounting Software Program Structure

To navigate more easily in any accounting software it is important to understand the difference between accounting, bookkeeping, and reporting. It’s also important to understand the basic organizational structure that is common to all accounting software. In spite of all the ancillary menu options and all the different terms used by competing accounting software products, there are really only three major components of any accounting software package: Input, Output, and Maintenance.

Input refers to all of the “bookkeeping” tasks discussed above. This includes entering invoices, checks, bills, payments, payroll, accounts payable and adjusting entries. Each accounting software may “disguise? this input function under different names: “tasks” or “activities”, or it may include specific input functions separately under each cycle area, or it may simply provide icon pictures of activities to be clicked on. Regardless of the specialized “look” of the program, the most important and most heavily used routine in any accounting software is data input.

Output refers to all of the reporting functions of the program. Once transactional data has been entered, the only usefulness in having it entered is the ability to retrieve it in a variety of report formats. Generally, these reporting options are found grouped together under one menu, not surprisingly labeled, “reports”! However, with some programs, they are scattered throughout the menus as appendages to each major cycle activity.

Maintenance encompasses the accounting tasks and can be broken down into two sub-categories: utility maintenance and data file maintenance. Utility maintenance refers to overall utility features like backup, restore, import and export data, fiscal year close, purge, or condense and repair data. These are all usually found on one menu and are generally placed under administrative password control to prevent unauthorized use.

Data file maintenance does require data input, but the input is not transactional. This refers to the creation and maintenance of the chart of accounts (in support of the general ledger), the customer list, vendor list, inventory list and employee list. These are generally found in one area usually labeled “maintain” or “lists”. In other programs they may be separated and found within each module (i.e.: customer list in the accounts receivable module or revenue cycle).

Understanding how your own accounting software works, (where its input, output and maintenance functions are), is as important as understanding the actual double entry accounting that is occurring “behind the scenes”. As you will discover throughout the Accounting Policies and Procedures Manual, you need to know how the numbers have developed and where they came from, in order to establish effective accounting policies and procedures to insure their integrity, accuracy and completeness for financial internal control.

Now that you know the difference between accounting, bookkeeping, and reporting, Download Free Policies and Procedures to see how easy it is to edit MS Word Templates to build your own Accounting policy and procedure management system.

More Articles from Bizmanualz...

  • What Are the Uses of Cost Accounting Information?What Are the Uses of Cost Accounting Information?
  • What Systems Does a Business Need?What Systems Does a Business Need?
  • How Do Accounting Systems Work?How Do Accounting Systems Work?
  • What Are Accounting Management Systems?What Are Accounting Management Systems?
  • 5 Great Ways to Improve Client Communication Using Technology5 Great Ways to Improve Client Communication Using Technology
  • How to Reduce SOX Accounting Compliance CostsHow to Reduce SOX Accounting Compliance Costs
  • What Is in Accounts Receivable Policy Manual?What Is in Accounts Receivable Policy Manual?
  • What Are Accounting Controls and Processes?What Are Accounting Controls and Processes?
  • What Purchasing Procedures Does Your Company Need?What Purchasing Procedures Does Your Company Need?
  • What Are Cash Cycle Procedures?What Are Cash Cycle Procedures?
Share

1 Comment

  1. Dean says:
    October 14, 2015 at 12:06 pm

    Great post and explanation on the differences of these important terms. These terms confuse many people on a regular basis. This detailed article will prove to be a valuable resource for those individuals in the future. Thanks for contributing!

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Products

  • AS9100 D Quality Procedures Manual AS9100 Quality Procedures Manual Rev D | ABR217M Aerospace Quality Procedures Manual $ 395.00 $ 297.00
  • Accounting Policy Procedure Manual MS-Word Template Accounting Policies and Procedures Manual
    Rated 4.60 out of 5
    $ 495.00 $ 397.00
  • Finance Policy Procedure Manual Finance Policies Procedures Manual | ABR42M
    Rated 4.75 out of 5
    $ 495.00 $ 347.00
  • it standard operating procedures IT Policies and Procedures Manual
    Rated 4.40 out of 5
    $ 495.00 $ 397.00
  • Human Resources HR Policy Procedure Manual HR Policies and Procedures Template | ABR41M
    Rated 3.89 out of 5
    $ 495.00 $ 347.00
  • Sales Marketing Policy Procedure Manual Sales Marketing Policies and Procedures Manual | ABR44M
    Rated 3.67 out of 5
    $ 495.00 $ 347.00
  • Security Policy Procedure Manual Security Policies and Procedures Manual $ 395.00 $ 297.00
  • Disaster Recovery Policy Procedure Manual Disaster Recovery Planning Manual
    Rated 4.00 out of 5
    $ 395.00 $ 297.00
  • ISO 9001 Procedures ISO 9001 2015 Procedures | ABR211M
    Rated 4.60 out of 5
    $ 495.00 $ 347.00
  • ISO 22000 Food Safety Procedures Manual ISO 22000 Food Safety Procedures Manual | ABR213M
    Rated 3.83 out of 5
    $ 395.00 $ 197.00
 Free Sample Policies Procedures

Get to Know Us

About Bizmanualz

Our Customers

Our Contributors

Featured Products

Free Policies and Procedures

Privacy Policy

FAQs

Risk Free Guarantee

Process Improvement

Contact Us

Recent Posts

  • Do You Make These Quality Mistakes?
  • What Effective Methods Help Manage a Virtual Office?
  • What Is Lean Product Development?
  • Why is Consistent Quality Important?
  • How to Transfer A Large File
  • What Does ISO Mean?
  • How has COVID Impacted Business Process Management?
  • What Are The Safety Measures in Your Workplace?

Business Procedures

Accounting Manuals Template

Finance Procedures

HR Procedures

IT Policies and Procedures Templates

Sales Marketing Procedures

Quality Assurance Policy Statement and Procedures

Medical Office Procedures

Employee Handbook Manual

Aerospace Procedures

Food Safety Procedures

Security & Disaster Plans

Production Procedures

Procedure Writing Guide

Featured Manuals

  • Alt Text CEO Bundle and Document Management Software Package $ 2,495.00 $ 1,857.21 one time, and
    $ 990.00 / year
  • St. Louis ISO auditor training class ISO 9001:2015 Classes | Lead Auditor Training St Louis MO $ 2,395.00 – $ 3,270.00
  • 9-Manual CEO Company Policies and Procedures Bundle | Save 45%
    Rated 4.50 out of 5
    $ 2,495.00 $ 1,997.00
  • CFO Responsibilities Financial Accounting Procedures 5-Manual CFO Internal Control Procedures Bundle| Save 34%
    Rated 4.64 out of 5
    $ 1,695.00 $ 1,497.00
  • AS9100 D Quality Procedures Manual AS9100 Quality Procedures Manual | ABR217M Aerospace Quality Procedures Manual $ 595.00 $ 499.00
Copyright ©1999-2020 Bizmanualz, Inc. All Rights Reserved | Sitemap | Privacy Policy
0
  • Home
  • Contact Us
  • About Us
  • Help
  • My Account