Concept of book keeping

Meaning of book keeping: The process of recording

financial transactions in systematic and scientific way
and in a chronological order in order to calculate the
financial position of the business organization is
known as book keeping.
In other words, According to R.N. Carter,” Book
keeping is the science and art of correctly recording in
the books of account, all those business transactions
that result in transfer of money or moneys worth .”
Book keeping is a part of accounting. Accounting
process starts after its end. The person responsible to
maintain book keeping is called book keeper.
 Objectives of book keeping
The main objective of book keeping is to keep a complete and accurate
record of all the financial transactions in a systematic order and in
logical manner. This ensures that the financial effects of transactions
are reflected in books of accounts. The following are the main
objectives of book keeping:
To identify the financial transactions: Book keeping keeps the
records of financial transactions only. It identifies the transactions
which can be measured in monetary terms and ignores those which
are non financial in nature.
To classify the financial transactions: Book keeping classifies
financial transactions into three different accounts i.e. personal
account, real account and nominal account.
 To keep permanent record of financial transactions: Records
are useful for future references. So, book keeping also keeps
permanent record of financial transactions for the future. For this, it
prepares journals, ledgers, subsidiary books, cash books and so on.
 Importance of book keeping
Book keeping is important to maintain accurate financial records. It
helps the businesses to effectively manage cash flows, planning for
future and being well informed about running of business. The main
importance of book keeping are as follows:
helps in budgeting for planning: Book keeping is important because
it helps in budgeting of incomes and expenses in the properly organized
form. Book keeping presents the past financial performance of
company in order to plan for the future.
provides financial information to its users: Book keeping is the
organization of financial information. Keeping the financial records
organized makes it easier to locate and provide to employees,
customers, investors and lenders etc.
 helps to ascertain profit or loss of the business: Book keeping
prepares the income statement which is one of the financial
statements which determines the profit or loss of the business.

Helps for internal control (detecting frauds and errors): A good book
keeping system is a safeguard against persistent internal frauds and
errors. An accurate book keeping system helps to investigate the
fraudulent activities of employees and others.
Thank you!!!