MEANING AND DEFINITIONS OF BOOK-KEEPING
Book-keeping is the act of keeping written records of the financial transactions of a business. An owner or an accountant cannot keep in memory all the financial transactions that take place in the business for the whole year. Therefore, all such transactions have to be recorded in some books for future purposes. Book-keeping keeps records of financial transactions systematically in chronological order for the purpose of future use. Formally, book-keeping may be defined as an art of making routine records of day-to-day financial transactions of a business in a prescribed form according to a set of rules The following are some famous definitions of book-keeping.
LC. Cropper: “Bookkeeping may be defined 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, combined statement of their result may be prepared.”
J. R. Batliboi: “Book-keeping is the art of recording business dealings in a set of books.
It is clear from the above definitions that Book-keeping is a body of knowledge which is concerned with the recording of financial transactions of a business in a set of books systematically in chronological order as and when they take place with a view to preparing some further statements
OBJECTIVES OF BOOK-KEEPING
The following are the important objectives of book-keeping
1. To identify financial transactions: Book-keeping identifies financial transactions from a large number of business transactions to keep their record.
2. To keep permanent records: It keeps permanent records of financial transactions as and when they arise in a systematic order.
3. To classify transactions: It classifies all financial transactions into three types – personal, real, and nominal and records them accordingly in a permanent boook.
4. To prepare statements: It helps to prepare different statements to summarise present and interpret the financial information contained in the routine records.
