What is Bookkeeping?

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This entry is part 1 of 1 in the series Basic Accounting

Bookkeeping is mainly concerned with the recording of financial data relating to business operations in a significant and orderly manner. It involves the process of recording, analyzing and interpreting the financial transactions.

Bookkeeping is the branch of Accounting which guides us how to keep a record of financial transaction. Such record are not only critical for the business or individual but also required by the law. It is a bookkeeper’s duty that financial statements setup correctly so that an accountant / taxman can easily perform further legal and tax related tasks on time. It is an art and science of correctly recording business transactions in a systematic and chronological order.

Definitions of Bookkeeping

Bookkeeping has been defined by many authors in many different ways. Let’s look at some of the popular definitions:

By J. R. Batliboi : “It may be defined as the science as well as the art of recording business transactions under appropriate accounts”

By R. N. Carter : ” It is the science and art of recording correctly in books of accounts all those business transactions that result in the transfer of money or money’s worth.”

By L. C. Copper : “Bookkeeping may be described as the science of recording transactions in money or money’s worth in such a manner that, at any subsequent date, their nature and effect may be clearly understood and that, when required a combined statement of their results may be prepared.”

The need for maintaining a record of Income and Expenditure in a systematic manner has given birth to the subject of bookkeeping.

For an example – Bookkeeping starts when a transaction of goods purchased identified and further includes entry booking in the books of accounts, Sales and Inventory registers management, a creditor’s liability until it’s paid.

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2 Comments

  1. Pingback: Branches of Accounting - AccountingMantra

  2. Pingback: What is a Transaction? - AccountingMantra

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