Bookkeeping

Bookkeeping is the method of recording of financial transactions which includes purchases, sales, payments and income by an organization or individual.  Bookkeeping is usually done by the bookkeeper. Bookkeeping is the art, method or practice of recording business transactions in a systematic manner. Booking should not be compared or confused with the accounting. The bookkeeping is done by bookkeeper, whereas the accounting is done by the accountant. The accountant makes the statements from the recorded business transactions posted by the bookkeeper and files forms with the government agencies.

Bookkeeping is the art of recording business transactions. An art is defined as a branch of human knowledge which leads to the doing or making of something.  The “something” in this instance is a running history of a business in terms of figures. Accounting, on the other hand, may be called the science of business transaction as distinguished from the art; and as by a science we mean “classified facts”, so accounting comprises the assembling or classifying of the facts which bookkeeping has arranged. By analyzing them (i.e. breaking them up) and constructing them in different shapes and pictures, accounting produces the results as losses and gains, leakages, economies etc., which tell the story of the business, its progress or retrogression, and its limitation and possibilities. A bookkeeper gives a history of the business which the accountant interprets or analyzes.

Objects of Bookkeeping:

• To enable the proprietor to ascertain the money value in or due, the business, represented by assets; and the money value owned by the business, represented by the liabilities
• To enable the proprietor to ascertain whether the business is being run at a profit or loss and the sources of such profit or loss.

Questionnaire:

• What is bookkeeping?
• What are the difference between accounting and bookkeeping?
• Mention the objects of bookkeeping?