Definition & Types of Bookkeeping
Book-keeping is a primary and basic function in the process of accounting and concerned with recording and maintenance of books of accounts only.
According to J.R.Batliboi, “Book Keeping may be defined as the science as well as art of recording business transaction under appropriate accounts”.
Types of Bookkeeping
1: Single Entry Bookkeeping
Single Entry system of book keeping is maintained by small businesses. There will be 2 column, one column for revenue and another for expenses. Tracking of Inventory, accounts payable and accounts receivables.
Transactions in single entry system won’t be having debit and credit side.
2: Double Entry Bookkeeping
Double entry system of book keeping is used by small as well as big businesses. Under this method two entries are made for each transactions and can also keep track of inventories, accounts payable , accounts receivables etc.
Process of Bookkeeping
- Identification of the transactions
- Recording of transactions in journal
- Preparation of ledger accounts
- Preparation of Trial Balance
- Making a worksheet of the financial statement
- Adjusting the Entries
- Verifying the financial statements
- Advising on taxation matters
- Closing of the books.
Difference between Book Keeping and Accounting
| Book Keeping | Accounting |
|---|---|
| It is just recording the transaction and has a narrow scope | It has a broader scope which involves recording, classifying, summarising and interpreting the results |
| Book keeping is the part of accounting. And it is the first stage of accounting | |
| It follows the principle of Accounting | It has its own set of principles |
| It is a routine work | It is complicated and specialized work |
