Bookkeeping & Payroll Accounting

Bookkeeping and payroll accounting duties can be demanding but rewarding.

Bookkeeping and payroll accounting employees play an important role in a corporation's financial accounting and reporting system because they help record transactions in accordance with regulatory guidelines, professional standards, corporate policies and industry practices. Bookkeepers and payroll accountants typically hold associate's or bachelor's degrees in accounting, finance, auditing or tax.

Bookkeeping Defined

Bookkeeping is a business practice that helps a firm record economic transactions. A bookkeeper typically debits and credits a financial statement account to make journal entries and record operating data in a general or subsidiary ledger (accounting document). An account can be asset (resource), liability (debt), revenue (sales), expense (cost of sales) and equity. A bookkeeper debits an asset or expense account to increase its balance and credits a revenue, liability or equity account to increase its balance.

Function

Bookkeeping is pivotal in a corporation's data reporting system because it provides senior leadership with operating information they need in analyzing business performance and making short-term decisions or engaging in long-term projects. A bookkeeper typically works under the guidance of an accountant and prepares limited financial statements, such as accounts payable or receivable reports, that conform to generally accepted accounting principles (GAAP), industry practices and senior management's recommendations. A bookkeeper generally holds an associate's or bachelor's degree in accounting.

Payroll Accounting Defined

Payroll accounting consists of procedures and mechanisms a firm puts into place to ensure that accountants process employee salary information accurately and completely. A payroll accountant typically records in a ledger salaries as well as employment benefits and regulatory contributions such as Social Security and unemployment insurance payments. He generally credits cash (asset account) and debits salaries payable (liability account) or salaries expense when a company makes payments to employees. A payroll accountant typically has a four-year college degree in accounting or taxation.

Payroll Accounting Significance

Payroll accounting is significant in a company's financial reporting system because it helps the firm prepare "fair" and complete financial statements that comply with GAAP, Securities and Exchange Commission (SEC) rules and other regulations. ("Fair" means accurate or objective in accounting terminology.) Complete financial statements include balance sheet, statement of profit and loss (P&L), statement of cash flows and statement of retained earnings. Adequate payroll accounting procedures also help prevent losses resulting from Internal Revenue Service (IRS) fines or audits.

Salary and Working Conditions

Salary levels for bookkeepers and payroll accountants generally depend on experience and academic or professional credentials. The Bureau of Labor Statistics reports that median wages of bookkeepers and payroll accountants were $32,510 in 2008, with the top 10 percent of the occupation earning more than $49,260 and the bottom 10 percent earning less than $20,950. A bookkeeper or a payroll accountant usually has a standard 8 a.m. to 5 p.m. work shift but occasionally may work longer hours if business conditions require it (month-end accounting process, for example).

References

• Herzing University: Bookkeeping and Payroll Accounting Courses and Descriptions
• AccountingCoach: Bookkeeping
• AccountingCoach: Payroll Accounting
• Bureau of Labor Statistics: Bookkeeping, Accounting, and Auditing Clerks