Book Keeping Meaning – Introduction, What is ? (All Details)
Book Keeping Represent all documents in business which contains financial records and act as evidence of the transactions which have taken place. Book-Keeping is the science and art of correctly recording in the books of account all those business transactions that result in the transfer of money or money’s worth.
Accounting and book-keeping are not one and the same. Accounting is a wider term. Accounting includes Book Keeping
Book keeping is an activity concerned with the recording of financial data relating to business operations in a significant and orderly manner. It covers procedural aspects of accounting work and embraces record keeping function. Obviously book-keeping procedures are governed by the end product, the financial statements. In India, the term ‘financial statements’ means Profit and Loss Account and Balance Sheet including Schedules and Notes forming part of Accounts. As discussed earlier, Profit and Loss Account gives result of economic activities for a period and Balance Sheet states the financial position at the end of the period. Book-keeping also requires suitable classification of transactions and events. This is also determined with reference to the requirement of financial statements. A book-keeper may be responsible for keeping all the records of a business or only of a minor segment, such as position of the customers’ accounts in a departmental store. A substantial portion of the book-keeper’s work is of a clerical nature and is increasingly being accomplished through the use of a mechanical and electronic devices. Accounting is based on a careful and efficient book keeping system.
The essential idea behind maintaining book-keeping records is to show correct position regarding each head of income and expenditure. A business may purchase goods on credit as well as in cash. When the goods are bought on credit, a record must be kept of the person to whom money is owed. The proprietor of the business may like to know, from time to time, what amount is due on credit purchase and to whom. If proper record is not maintained, it is not possible to get details of the transactions in regard to the expenses. At the end of the accounting period, the proprietor wants to know how much profit has been earned or loss has been incurred during the course of the period. For this lot of information is needed which can be gathered from a proper record of the transactions. Therefore, in book-keeping, the proper maintenance of books of account is indispensable for any business.