Book-keeping
Book-keeping is the foundation of accounting, involving recording transactions systematically and chronologically to assess financial performance. Learn the key differences between book-keeping and accounting in terms of scope, nature, and roles. Book-keeping aids in comprehending a business's financial status and is crucial for accurate financial reporting.
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Book-keeping is a process of recording business transactions chronologically in a systematic and scientific manner in a separate set of books. Book-keeping is the first stage of accounting. This stage of accounting is mechanical and repetitive in nature. Essential features of book-keeping:- Book-keeping is an art as well as science Recording and classifying business transactions Recording in a separate set of books Recording in terms of money Recording chronologically Recording in a systematic manner Book-keeping helps in understanding the financial performance and position of the business.
BOOK-KEEPING- AS A PROCESS:- Book-keeping as a process includes the following steps; Identifying the transactions of financial character Measuring the transactions in terms of money Recording the transaction in the books of original entry Posting the transaction into ledger Balancing the account opened in the ledger and; Preparing trial balance
Book keeping an accounting are used in the same meaning, but in the real sense, they have adequate difference which is as under:
DIFFERENCE BETWEEN BOOK-KEEPING AND ACCOUNTING BASIS OF DIFFERENCE Scope Nature BOOK-KEEPING ACCOUNTING Scope of Book-keeping is narrow. The function of book-keeping is clerical and routine nature. Book-keeping recording business transactions, posting them into ledger and balancing of accounts. Scope of Accounting is broad. The function analytical. Accounting includes not only the preparation of records, but also the preparation of summary statements and analysis, interpretation communicating the result to the users. It is the second Accounting. The accounting starts where the work of book-keeping ends. of accounting is type includes in reports, their and Stages It is the first stage of Accounting. The work of bookkeeping starts when business transaction takes place. stage work of of
BASIS OF DIFFERENCE BOOK-KEEPING ACCOUNTING Who Perform This person bookkeeper. The work of bookkeeping is performed according the rule and Hence, there is no need to take personal by a book-keeper. For book-keeping knowledge and ability is not required. In present time, the work of book-keeping is done on computers. work is done called by a a This work is performed by a person called accountants. Personal Judgement The analytical in nature. Hence, the accountant has personal judgement work of accounting is to regulations. to take judgement Special ability and Knowledge special For knowledge required. It is due to this fact that company those accountants who have greater degree specialization that is Chartered Accountants. Accounting ascertains financial position of the business. accounting special ability and is appoints only of skill and in accounting Knowledge of Financial Positions Book-keeping throw financial business. does not the the the any light on of position
BASIS OF DIFFERENCE Dependency BOOK-KEEPING Book-keeping depend on accounting to make the records effective and useful. A book-keeper responsible for accounting work. ACCOUNTING has to Accounting has to depend on book-keeping to get the record information on time. more Responsibility is not An accountant is responsible for book-keeping work. It is because the task of book-keeping is done under his supervision. Although book-keeping differs from accounting yet it is a part of accounting. On the basis of transactions recorded and classified in book-keeping, the final accounts are prepared in accounting.
