CONNECTED WITH A MONETARY EVENT OR TRANSACTION

CONNECTED WITH A MONETARY EVENT OR TRANSACTION:
Accounting must be in relation to a monetary event or transaction and the event or transaction must
be measurable in terms of money. In other words, no accounting is possible for an event or transaction
,h is not measurable in terms of money, e.g. passing an examination, delivering lecture in a meeting,
ning a game etc. These are events no doubt, but since these are not measurable in terms of money, there
^b fto question of their accounting.
TRANSACTIONS ARE PROCESSED IN THREE DIFFERENT STAGES: Recording:
In the first stage the transactions are recorded chronologically in the books of accounts. Classifying:
In the second stage the transactions of the same or sfmilar nature are classified and recorded I «parately.
Summarising:
'
In the third stage all the necessary date and information are summarised on the basis of classified .•ccrd of transactions and communicated to management and other interested persons.
Interpretation:
In order to assertion the true position of a concern all the accounting data and information relating c • are analysed and interpreted.
All the above functions are performed on the basis of certain well-defined and well-coordinated -wes and principles. An accountant must be familiar with all these rules and principles. In accounting we udy all these rules and principles.
I fc»k-Keeping:
Book-keeping is the art of recording monetary transactions in the books of account in a proper TMT.Ter. The books of accounts are recorded in such a way as will enable us to ascertain the complete and I awnrate result in the least possible time with minimum labour and cost.
Many authors have defined the terms 'Book-keeping' in different ways;
1. "Book-keeping means the recording of transactions, the record making phase ofAccounting (it is only a small part of the field of Accounting and probably, the simplestpart." - Meigs, Johnson and Meigs.
2. "Book-keeping is the recording branch of Accounting." -- Encyclopaedia Britannica.
3. "Book-keeping is the art of recording in books of accounts the monetary aspect ofcommercial or financial transactions." Northcot,
BOOK-KEEPING VERSUS ACCOUNTING
A great deal of efforts goes into gathering and processing information about a concern before the
end up in an accounting report. Much of the work required is clerical in nature and can be performed
rffice workers, machine and computers. The functions of Book-Keeping is to properly record the
iMDL-.il transactions in the books of account. But the function of Accounting is more extensive it has other functions to do except recording transactions, e.g. classification, summarisation and
UBBHOfttation'pof transactions. Thus we see that Book-Keeping is confined to recording aspect of Accounting
a a small and the simplest pan of Accounting. Both represent two different phases of the main subject
•ftcsxntancy". Book-Keeping is the first stage, while Accounting is the final stage, that is why, it is said