What about accounting
What is Accounting
Accounting is a part of our life. All of us do some accounting, often without realizing it. Forexample, one morning, you realize suddenly that you needed to buy a book urgently. You ask one of your parents for the money. But the parent says, “What happened to the money I gave last week?” You either recollect how you spent it or if you have noted it systematically in your diary, you explain how the money was spent. In fact, you are ‘accounting for the money given to you. In business, however, it is a more serious matter. A businessman works hard to earn profit. He performs various activities in business known as transactions e.g. purchasing of goods, selling of goods, deposit and withdrawal of money from bank, making payment to employees and workers, receiving payment from customers etc. A transaction may be defined as an economic activity between two or more persons or firms. A transaction involves transfer of
money or money’s worth (goods or services) from one person to another. These transactions take place regularly in the business. It is impossible for the businessman to keep all these transactions in memory. For this, it is essential to record the transactions properly. There must be documentary evidence for every business transaction. It requires a systematic and scientific system in the business to record all the transactions of financial nature.
Previously the terms book-keeping’ and
accountancy’ were regarded as one thing. But in modern age the word ‘accountancy’ has different meaning.
Accountancy is a broad concept and it includes book keeping also.
Accountancy is concerned with analysis of records.
A businessman prepares various statements and calculate ratios to measure the actual performance of the business.
Comparison of actual performance with desired performance helps in effective planning for future. In this way, accounting is the art of identifying, classifying, recording, summarising and analysing business transactions of financial nature. Meaning of Book-keeping Em? In business the financial transactions so complicated and so many in number that it is not possible to remember them. So these dealings are written in the form of
money. The procedure of this writing down is called Book keeping. In a general sense book keeping means to arrange books properly.
According to J.R. Batliboi-Book-keeping is an art of recording business iransactions in books of Accounts”.
According to Arther Fieldhouse- “Book-keeping is an art and science, according to which financial transac-
tions are recorded accurately and continuously in such a way to find out the profil or loss of any point to time”
According to William Pickles-“System of Book-keeping can be used at all places under which every debil has credit”:
Ideal Definition of Book-keeping
According the definitions given above the following facts should also be included in the definition of Book-keeping
(1) It is an art and science-It is both a science and an art. It is a science in the sense that it is group of orderly learning which is based on certain doctrines. It has some rules and some definite goals. It is an art because in it ac-
counting is done according to the determined rules, and these rules are used to attain the objects and goals for which accounting is being done.
(2) Records of an individual, firm, corporation, company and an institution-Recording of transaction is done of co-operative societies, clubs and other organisations also.
There are differences in opinion that every type of recording of transaction should be called book-keeping or only accounting of business transactions. In fact recording of every monitory transaction is called book-keeping. Although the motive of some institutions and clubs may not be to earn profit and it may also be possible that they even don’t do business. But there is also dealing or exchange, selling and purchasing of goods and property, and they also keep a
record of transactions to know their financial position or due to some other reasons. So records of such institutions can also be included in Book-keeping.
(3) Records of financial transactions in terms of money-Only monetary transactions are recorded in it, all types of transactions or non-monetary transactions are not recorded.
(4) Certain books-Recording of transactions related to business is done in the books of business, which are called journal or ledger.
(5) Certain system-To get reliable and correct results and to provide authority in court it is quite necessary that recording of transactions is done on certain principles and rules discretionarily. There should be regularity. The importance should be given to accepted traditions, conventions and basic principles.
(6) Objects of recording-The act of book keeping is done due to some object. Some scholars consider that this act is done to calculate the profitability of the business and to find out that how much we have to receive from others. In real sense it is the object of accountancy. But even though
it is true that the base of accountancy is book-keeping, then how can the objects of Accountancy be different from the
objects of book-keeping?If we include all the above-mentioned facts, an ideal.
definition of book-keeping can be given as follows:
“Book-keeping is an art and science both ander which the monetary fornt of business Transactions and other trunsuctions related to financial nature of a person firm.
