Book keeping:
Book-keeping is mainly concerned with the recording of financial data relating to the business operations in a significant and orderly manner. It is concerned with the permanent record of all transactions in a systematic manner to show its financial effect on the business. It covers procedural aspects of accounting work and includes record-keeping functions. It 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. It is mechanical and repetitive. This work of bookkeeping is of clerical nature and usually entrusted to junior employees of the accounts section of a business house. Now-a-days, most of the book-keeping work is done through computers and other electronic devices. In fact, accounting is based on a systematic and efficient book-keeping system. The main purpose behind book-keeping is to show the correct position regarding each head of income and expenditure as well as assets and liabilities. Further, book-keeping is meant to show the effect of all the transactions made during the accounting period on the financial position of the business.
Book-Keeping and Accounting
Book-keeping and accounting are often used interchangeably but they are different from each other. Accounting is a broader and more analytical subject. It includes the design of accounting systems which the book-keepers use, preparation of financial statements, audits, cost studies, income-tax work, and analysis and interpretation of accounting information for internal and external end-users as an aid to making business decisions. This work requires more skill, experience, and imagination. The larger the firm, the greater is the responsibility of the accountant. It can be said that accounting begins where book-keeping ends. Book-keeping provides the basis for accounting. Some people mistake book-keeping and accounting to be synonymous terms, but in fact they are different from each other. Accounting is a broad subject. It calls for a greater understanding of records obtained from book-keeping and an ability to analyse and interpret the information provided by book-keeping records. Book-keeping is the recording phase while accounting is concerned with the summarising phase of an accounting system. Book-keeping provides necessary data for accounting and accounting starts where book-keeping ends The following are the points of distinction between book-keeping and accounting: Recommended Articles
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