events. Thus the business transactions include purchase, sale of
goods, rendering various services, receipts and payments for such
transactions. In a business concerns the transactions are
numerous. The details of all transactions cannot be remembered by
the business man. Therefore it is necessary to keep written records
of all such transactions. The records of written transaction will help
business to settle disputes and also possible to provide valuable
information to the owner of business. Book-keeping disciple has
been developed to serve this purpose. The aim of Book-keeping is
to provide the information needed by the businessmen and also it
helps him to take decisions.
MEANING OF ACCOUNTING
The American Institute of Certified Public Accounts (AICPA)
defined Accounting as “Accountancy is the art of recording
classifying and summarizing in a significant manner and in terms of
money transactions and events which are in part of at least a
financial characters and interpreting the result there of”.
Again in 1966, AICPA defines Accounting as “The process of
identifying, measuring and communicating economic information to
permit; informed judgement and decisions by the uses of accounts”.
Thus accounting may be defined as the process of
recording, classifying, summarizing, analysing and interpreting the
financial transactions and communicating the results. There of to
the persons interested in such information.
The utility of accounting information is greatly increased
when it is compiled in a systematic manner and financial
statements are prepared at periodic intervals.
There is difference between the terms “Book keeping” and
“Accounting”. Book keeping is merely concerned with orderly record
keeping and recording business transactions and financial
Accounting is border in scope than book keeping. Accounting
involves analysis and judgements at different stages such as
recording of transactions, classification, summarization and
The basis aims of book-keeping and accountancy are to
record the business transactions and events in a summarised form.
Transactions are recorded in chronological order in proper books of
accounts book-keeping. Accountancy and science based or
fundamental truth and rules or conducts or procedures which are