Book-Keeping - Meaning, Definition, Features and Importance

≽ What does bookkeeping meaning?

Bookkeeping is an art of recording of the business transactions in a systematic manner in the books of accounts. The transactions must be recorded in terms of money and in date-wise form. The accurate business results form such records at the end of accounting year. 

In simple word, Bookkeeping related with the recording of business transactions. all the activities of business are recorded for the purpose of taking out profits and loss of the business. 

Book-keeping also required classification of transactions and events. Maintaining book-keeping records is to show correct position of business in terms of income and expenditure. The main purpose is to maintain book-keeping is to know how much profit has been earned or loss earned during the course of the period. For this lot of information is required which can be recording of transactions. Therefore, in book-keeping, the proper maintenance of books of accounts is indispensable for any business.

 

≽ What is the definition of book-keeping?

Book-keeping is defined by:

1) Richard Strahelm; "The art of analyzing and recording business transactions, reporting results of business operations through periodic statements and interpreting such results for purposes of effective control of future operations."

 2)  Batliboi: "Bookkeeping is an art of recording business dealing in a et of books."

3) Nocth Cott: "Book-keeping is an art of recording in the books of accounts the monetary aspects of commercial or financial transactions."

4) Carter: "Book-keeping is the science and art of correctly recording in the books of accounts, all those business transactions that results in transfer or money or money's worth."

 

≽ Features of book-keeping

1) It is the method of recording day to day business transactions.

A book-keeper may be responsible for keeping all the records of a business or only of a minor segment. When businessmen get the goods to sell it a purchase and when he give it to customer it's a sale. This is the basis activity business involve in every type of business. By Book-keeping it's facilitate businessmen to check the reports of his sale and purchase. 

2) Only financial transactions are recorded.

The proprietor or business may like to know, from time to time. what amount of purchases and sales made during the period, here in book-keeping proprietor make record of only financial transactions which will give him an accurate reports of financial transactions.

3) All records are prepared for a specific period which are useful for future references. 

The purchase of goods are recorded till it get sold to the customer. Entry of purchases beings with the date of purchase and End on sale of every goods. By the sale of goods proprietor gets profit out of sale. So, all records are prepared for specific period only, and after that it used in future references.

 

4) Records of transactions are based on rules and regulations.

Obviously, to records the transactions there are certain rule and regulations. At major concern book-keeping seems important for preparation of financial transactions. For Company maintenance of books of accounts and preparation of Financial statement is have to follow rule of Company Act. Banks & Insurance companies have special Act and Governing Institutions. However, foe Sole-proprietor and partnership business, there is no such rule and regulation regarding maintenance of book of accounts.

 

5) It is an art of recording business transactions scientifically.

 According to J.R. Batliboi. "Book-keeping is an art of recording business dealing in a set of books"  and According to R.N. Carter. " Book-keeping is the science and art of correctly  recording in the books of accounts, all those business transactions that results in transfer or money or money's worth"

 

≽ Importance of book-keeping

The importance of book-keeping is as follows:

1) Record: In Business there are numbers of daily transaction happens. It is not easy to remember all of it. To get facilitate easily businessmen maintenance book-keeping records of the transactions. The recording of transactions stay permanently and systematically in the books of account.

 

2) Financial Information: Book-keeping is useful o get information related to Profit, Loss, Assets, Liabilities, Investments and stocks, etc. at any given time.

 

3) Decision Making: As recording all the transactions in the books. It will provides financial information to the businessman for decision making.

 

4) Controlling: Book-keeping enables the executives of the business to control the activities of the business.

 

5) Evidence: Businessman needs financial evidence to be produced in the court of law in case of any dispute.

 

6) Tax Liability: Book-Keeping is useful to find out the tax liabilities example; Income Tax, Property Tax, GST, etc.