Book Keeping

A number of financial transactions occur in a business organization on a regular basis which is related to buying, paying expenses, receiving incomes, acquiring assets, paying liabilities and collecting the dues. As all these transactions are required to be recorded for future references so, they are needed to be recorded in a proper way. Hence, the process of keeping the systematic record of the financial transaction is known as book- keeping.

Some of the main definitions of book-keeping are:

"Book- keeping is the art of recording business dealings in a set of books." -J. R. Batliboi

"Book- keeping is the art of recording transactions in a systematic manner." -Rosenkampff

Book-keeping is the science and art of correctly recording in books of accounts, all those business transactions that result in the transfer of money or money worth." -R.N. Carter

From the above definitions, it is obvious that book-keeping is the act of keeping permanent records of day-to-day financial transactions of a business in a set of books in chronological order.

Objectives

The following are the main objectives of book-keeping:

1. To keep permanent records
   Book-keeping is the act of keeping the record for the future reference in an appropriate manner. These records help in making the effective financial decisions in the future.
   
   
2. To classify transactions
   Book-keeping helps in classifying the financial transactions into personal account, real account, and nominal account. The classification of the financial transaction helps to get the required information easily.
   
   
3. To help to determine true profit or loss
   As book-keeping keeps the record of the income and expenses of the business, it helps to determine whether the organisation is having profit or loss.
   
   
4. To help to disclose true financial position
   Since, book- keeping gives the information of the assets, liabilities and capital of the business organisation, it discloses the actual financial position of the business organization.
   
   
5. To supply information
   Book-keeping gives the required information related to the organization at the time of need. It is helpful for making the financial plans and decisions for the future.
   
   
6. To help to access correct amount of tax
   Book-keeping keeps the correct record of the financial transactions so, it helps to make the correct assessment of income tax. The correct data helps to calculate the correct tax amount.