Bookkeeping in Accounting

You might be curious about what goes on inside the accounting departments. But first you must understand the meanings of accounting and bookkeeping. Accounting is a system used in auditing and maintaining records of a business for the financial reports of the company. Bookkeeping is a type of accounting method that records and summarizes the transactions of businesses. Both are important in checking the business is growing. Accounting and bookkeeping ensure this by balancing the profits and losses of a business.

The first and most important task of certified public accountants (CPAs) in any company is preparing the payroll. The payroll is the total amount of money paid to the wages of employees. All salaries as well as taxes deducted from employees' salaries are recorded in the payroll. This department insures that appropriate taxes – whether federal, state or local are deducted from the wage earned by the employee.

You can see the pay stub attached to your paycheck indicating the appropriate amount of tax subtracted from your regular salary. These deductions usually come in the form of income tax, social security taxes and other employment taxes that must be paid to the local and state government. There might be other deductions in the wage like retirement pay and sick pay. Doing all of these is an important function of the payroll department. Most companies have their own payroll departments whereas others prefer to outsource it by hiring consultants or specialists.

Another task of the accounting department is to receive and record any payments made by the clients to render a service or purchase a product from the company. The department has to ensure that money is documented accurately and should be deposited to the appropriate accounts. It decides on whether to give out cash advances or disburse the money. The department does not necessarily keep the money but it is informed of its location so that it will be easy to get the money in case of emergencies.

The accounting department manages where the money will be distributed and how much is kept. They also allocate money for the payment of liabilities of the company like bank loans, payment to suppliers and other vendors. They are the ones who place the investment for the company provided that they have the permission from the owners.

The third task of the accounting department is to disburse money for the payment of liabilities and other obligations. This is called cash disbursement wherein a company will write checks for the whole year to pay supplies, salaries, purchases, loans and taxes. It is the accounting department who prepares all these checks. They record to whom they have given the checks, how much was disbursed and the purpose of disbursement In addition, their task is to keep track of orders placed for inventory such as for the supplies of products that will be sold to clients. They also maintain records of other assets in the likes of equipment and business properties. Examples of these assets are the pieces of furniture for the office, computer units, the rent for the building and even small items like pencils and paper clips.