Wednesday, July 14, 2010

BOOK-KEEPING VERSUS ACCOUNTING

A great deal of efforts goes into gathering and processing information about a concern before the facts end up in an accounting report. Much of the work required is clerical in nature and can be performed by office workers, machine and computers. The functions of Book-Keeping is to properly record the financial transactions in the books of account. But the function of Accounting is more extensive ( it has many other functions to do except recording transactions, e.g. classification, summarisation and interpretation'of transactions. Thus we see that Book-Keeping is confined to recording aspect of Accounting (It is a small and the simplest part of Accounting. Both .represent two different phases of the main subject "Accountancy". Book-Keeping is the first stage, while Accounting is the final stage, that is why, it is said

that Accounting starts where Book-Keeping ends. The function of Book-Keeping ends with the recording of transactions in the books of account. But the function of Accounting Is to classify the recorded transactions, summarise them, interpret them and collect and communicate necessary information to the management and olhej interested persons. Management performs its function on the basis of mis information, e,g. laying down rules and regulations, taking so many vitaUdecisions etc. Thus we may say that the function of Book-Keeping is primarily of clerical nature, while that of Accounting is concerned with organisational and administrative matters (it is more important and responsible.

Apparently, the functions of Book-Keeping seem to be less important than Accounting, but its necessity can hardly be denied. lust an article cannot be produced without raw material, similarly accounting function cannot be done without obtaining necessary data from Book-Keeping. Again, if there is any defect in raw material the article produced out of it will also be defective. Similarly, if there be any error or mistake in Book-Keeping, the accounting job will also be wrong and create anomalous situation. . Thus we can conclude that "Book-Keepers perform the routine, repetitive tasks of collecting and processing j financial information. Accountants are responsible for designing the systems within which Book-Keepcrs work; supervising the day-to-day work of book-keepers; recording unusual and complex transactions,! preparing, analysing and interpreting accounting reports; auditing the records; *nd -performing a'variety of] other complex accounting activities.

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