BookKeeping Definition J R Batliboi Bookkeeping is an

Book-Keeping Definition – J. R. Batliboi ‘ Book-keeping is an art of recording business dealing in a set of books’. Accountancy – “An act of recording, classifying & summarizing the business transaction, balancing of accounts, drawing conclusions & interpreting the result thereof”.

Importance of Book-keeping Record Financial Information Decision-Making Controlling Evidence Comparison Tax Liability

Utility Of Book-keeping Owner Management Government Investors Customers Lenders

Distinction Between Book-Keeping & Accountancy Point Book-Keeping Accountancy Meaning Book-Keeping records & classifies the business transactions. Accountancy summarizes & analysis business transactions Stage Book-Keeping is the First stage & it comes immediately after transactions Accountancy comes after recording & classification. Accountancy is the next stage after Book-Keeping. Objectives Book-Keeping aims at keeping the record & provides primary information Accountancy aims at finding the profits or losses & gives financial position. Junior staff is responsible for keeping records Senior staff is responsible for keeping accounts. Book-Keeping basically results in journal & ledger The result of accountancy is profit & loss account & balance sheet. Responsibility Results

Point Book-Keeping Accountancy Period Book-Keeping gives day to day details Accountancy gives details of entire year Scope Book-Keeping has a limited scope Accountancy has a wider scope Procedure Book-Keeping includes recording the entries of day to day transactions by following basic rules of double entry book-keeping system Accountancy includes processing of primary information available from books of accounts & preparation of financial statement Principles Book-Keeping requires principles of Accountancy requires all the elementary knowledge of accounting principles journalizing & posting

Classification of Accounts 1. Personal Accounts 2. Real Accounts 3. Nominal Accounts

Rules Of Debit And Credit For Different Accounts 1. Personal Accounts – ‘ Debit the receiver and Credit the giver’ Ex- If cash is paid in bank debit the bank account as the bank is the receiver of the benefit. 2. Real Accounts – ‘ Debit what comes in and Credit what goes out’ Ex- When machinery is purchased debit the machinery account as it comes in the business. 3. Nominal Accounts – ‘ Debit expenses and losses and Credit gains an income’ Ex- If rent is paid debit rent account as it an expenses. If commission is received credit the commission account as it is a gain.

Examples Personal Accounts – Anita’s Account , Vaibhav’s Account , Bank of Baroda’s Account, Kulkarni and Co. , Pune Municipal Corporation Real Accounts Cash A/c, Building A/c, Goodwill A/c, Patent A/c, Trade mark A/c,

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