01. Definition of Book-Keeping: It is the art of recording monetary transactions in the books of account in the proper manner.
According to E.L.Kohler: Book-Keeping as “the process of analysing , classifying and recording transactions in accordance with a pre-conceived plan for the purpose of providing a means by which an enterprise may be conducted in an orderly fashion and establishing a basis for recording and reporting the financial affairs of the enterprise and the result of its operations.”
2. Definition of Accountancy: The discipline which analyses the art and principle of recording all monetary transactions , is known as Accountancy.
According to F.W.Pixley: “Accountancy may be described as the science which deals with the recording of monetary transactions of every description.”
3. Is accountancy science and art?: Accountancy plays a very important role in these days of growing commercial and trade. Frequently various laws and Acts like Company’s Act, M.R.T.P. Act are being changed to meet the various requirements of an economy. So, business, trade, commerce are becoming more and more complex with the changes of business laws and regulations , the role of accountancy is also changing. Accountancy is both science and art. Science means knowledge while art is action or the way of doing a thing in a significant way on the basis of certain accepted principles. Now-a-days , accountancy has so much of practical utility that its theoretical study is overshadowed by its practical application. It has now become a practice-oriented subject. If, we analyse the definitions of accountancy we will find that it is a systematic and scientific record of transactions in a set of books. Recording of transactions is an art which is done on the basis of certain accounting principles.
4. Difference between Book-Keeping and Accountancy:
- Recording and posting are the two objectives of Book-keeping. The objects of Accountancy are to collect data, summarising and interpreting them to obtain some accounting information which are communicated to the management and other external users.
- Book-Keeping is the first phase of accounting while Accountancy is its final phase.
- No, specialised knowledge is required for making journal entries and posting to ledger accounts. But, for analysis , interpretation of data specialised knowledge is required.
- Recording and posting of business transactions are the two functions of Book-Keeping. Summarisation, Collection, interpretation and communication of accounting information of different users are the functions of Accountancy.
- Book-Keeping is used in narrow sense while Accountancy is a broader term.
- Book-Keeping is the basis of Accountancy and Accountancy is the basis of all economic decisions. Book-Keeping produces all accounting data on the basis of which accountancy collects important information by the interpretation of accounting data produced by Book-Keeping.
- Book-Keeping follows pre-determined principles and practices while accountancy makes research to introduce new accounting principles , policies and techniques.
- Book-Keeping is more or less static but Accountancy is a dynamic subject.
5. Definition of Accounting: It is the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are in part at-least of a financial character.
6. Salient features of Accounting:
- Connected with a monetary event or transaction.
- Transactions are processed in three different stages such as (a)Recording, (b) Classifying and (c) Summarising.
