Book-keeping

Book- keeping includes recording of journal, posting in ledgers and balancing of accounts. All the records before the preparation of trail balance are the whole subject matter of book- keeping.

Book- keeping is defined “as the science and art of recording transactions in money or money’s worth so accurately and systematically, in a certain set of books, regularly that the true state of the business affairs can be correctly ascertained”. 

Here it is important to note that only those transactions related to business are recorded which can be expressed in terms of money.

Bookkeeping has been defined by Baston (1979) 'as the art of recording the financial transactions of a business, or an individual, in terms of money, in a set of books in order to obtain necessary information when required'.

The definition has four distinctive parts:

1.  Bookkeeping is an art, not a science
2. It is concerned with recording financial and not any other type of transactions
3. The transactions must be recorded in terms of money and not in terms of quantity
4. The object of bookkeeping is to provide information about the conduct and status    of the        business.

 Carter R.N. defined “Book- keeping is the science and art of correctly recording in books of account all those business transactions that result in the transfer of money or money’s worth”. 

Objectives of Book- keeping

1. Book- keeping provides a permanent record of each transaction.
2. Soundness of a firm can be assessed from the records of assets and abilities on a particular date.
3.  Entries related to incomes and expenditures of a concern facilitate to know the profit and loss    for a given period.
4. It enables to prepare a list of customers and suppliers to ascertain the amount to be received or  paid.
5.  It is a method gives opportunities to review the business policies in the light of the past          records.
6. Amendment of business laws, provision of licenses, assessment of taxes etc., are based on records.

Difference between book-keeping and accounting

The fallowing are the difference between book-keeping and accounting.

1. Transactions.   Book keeping Record transactions in the books of original entry while accounting examine these recorded transactions in order to find out their accuracy.
2. Total and Balance.  To make total of the amount in journal and accounts of ledger, to ascertain balance in all the accounts while to prepare trial balance with the help of balances of ledger accounts.
3. Income Statement and financial position Preparation of trading. statement of comprehensive income and financial position is not book keeping while Preparation of trading, statement of comprehensive income and financial position is included in it
4. Liability. A book-keeper is not liable for accountancy work. An accountant is liable for the work of bookkeeper.
5. Special skill and knowledge. book keeping does not require any special skill and knowledge, as in advanced countries this work is done by machines. Accounting requires special skill and knowledge.