Accounting and Bookkeeping

1. Accounting is the process of systematic recording, reporting, and analysis of the information about the economic state of an organization. This information may be used in a number of ways: by a firm's managers to help them plan and control ongoing operations; by owners and legislative bodies to help them estimate the organization's performance and make decisions about its future; by governmental bodies to determine what taxes a business must pay.

2. In general, accounting can be divided into two fields – management and financial accounting. Management accounting provides accounting information for managers or internal users to help them make right decisions, for example, about purchasing, production, payments and sales. From the other hand, accounting that provides information to people outside the business entity or external users – to present and potential shareholders, creditors, economists, and government agencies – is called financial accounting.

3. At the root of all accounting is bookkeeping. Bookkeeping is the process of systematic recording of financial transactions of a business, so as to show how the transactions relate to each other. Bookkeeping is largely a mechanical process and does not involve any analysis of the financial transactions. Thus, it can be said that the role of bookkeeping is encompassed within the scope of accounting, and therefore the bookkeeping system used by a business is a part of the accounting system.

4. A bookkeeper keeps tracks of all the funds that a business handles, including money paid to the business, money paid out, and assets that the business holds. Although bookkeeping procedures can be extremely complex, all are based on two types of books used in the bookkeeping process – journals and ledgers. A journal contains the daily transactions (sales, purchases, and so on), and the ledger contains the record of individual accounts. The bookkeeper's goal is to keep the ledgers of the company balanced so that anyone can assess the financial state of the company.

5. The duty of an accountant, however, is to prepare financial reports using the information recorded by a bookkeeper. These reports usually include an income statement (or profit and loss statement) and a balance sheet.

6. The size of an accounting staff varies, depending on the company. In a small firm, an accountant may be responsible for keeping all financial records. In larger firms a chief accountant supervises the entire department, and ensures that the work is performed in a timely and accurate fashion.

Notes:

accounting – учет, бухгалтерский учет

bookkeeping – бухгалтерский учет

management accounting – управленческий учет

financial accounting – финансовый учет

bookkeeper – бухгалтер (счетовод)

accountant – бухгалтер (ревизор отчетности)

chief accountant – главный бухгалтер

keep tracks of – следить, отслеживать

to handle – управлять

assets – активы, фонды

journal – бухгалтерский журнал