Some people think that bookkeeping is the same as accounting. The term bookkeeping means different things to different people:
BOOKKEEPING DEFINITION UPGRADE
The following are the books of original entry used in book-keeping.Note: You can earn any or all of our Certificates of Achievement for Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Financial Ratios, Bank Reconciliation, and Payroll Accounting when you upgrade your account to PRO Plus. The ledger is the only book of account, so called because all the transactions after being first recorded in books of original or prime entry or subsidiary books are afterward grouped or summarized in accounts in the ledger. Important books of accounts for Bookkeeping
Bookkeeping record provides an easy way of comparing the financial position of a business for different periods.In the same way the study of book-keeping record reveals the past financial position of a business and at the same time guides the business man the necessary steps to be taken for further improvement in it in future. Just as the study of history tells the past facts and at the same time gives the guidance for the right steps to the taken in future. Book-keeping is a written history of a business in terms of money or finances.From the income tax point of view, a proper record is indispensable otherwise the traders will be at the mercy of the income tax authorities for the purpose of taxation.Therefore, proper record must be maintained to obtain the required information for efficient and smooth running of the business so that misunderstanding, wastes, fraud and errors may be checked. It is impossible for a businessman to remember all his dealings without keeping proper record for them, because everybody has been gifted by nature with a limited memory.The main reasons for keeping record are as under: > See for more information Accounting Basics. bookkeeping, accounting, costing, auditing, taxation etc. It covers the entire body of theory and practice, e.g. the scope of accountancy is far a wide and extensive compared to accounting. The word “accountancy” is far extensive i.e. Accountancy is the main subject while, accounting is one of its branches. The two words accounting and accountancy are often used to mean the same thing. Accounting includes not only maintenance of accounting records, but also the preparation and interpretation of financial Statements. The function of accounting is to classify the recorded transactions, summarize them, interpret them, and collect and communicate necessary information to the management and other interested parties.
Accounting is broad subject and final phase. The process of accounting begins where the bookkeeping process ends. On the other hand, accounting is reasonable for analyzing and interpreting of accounting data in order to take business decisions.ĭifference between Bookkeeping, Accounting and Accountancyīookkeeping is basic of recording of accounts in a systematic manner. In the most straightforward of terms, bookkeeping is responsible for recording economic transactions, classifying term and produce initial summary of accounts. It is recording or first phase of an accounting system.Īccounting and bookkeeping are two responsibilities, which are critical for each business organization. The functions of Bookkeeping is to properly record the financial transactions in the books of account. Its work is clerical nature and can be performed by office workers, machine and computers. Bookkeeping is a small part of the field of accountingand the simplest part, just like arithmetic is a small part of the broad discipline of mathematics. Therefore, it is useful to make a distinction. Persons with little knowledge of accounting may fail to understand the difference between these terms and often used to mean the same thing. Difference between accounting and bookkeepingīookkeeping should not be confused with accounting or accountancy.
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