Book Keeping

            This is an activity which is being referred to a systematic recording of financial transactions of a particular business on day to day basis. It is a particular part of accounting which helps in ensuring that, business transactions are being carried out in a proper way and recording of the same is being carried out well. It involves preparation of journal, posting entries into the ledger and then, preparation of final trial balance. In a particular firm, it is essential to ensure that, each business transaction is being recorded in an appropriate way. This would ensure that day to day accounting is completed and clear picture of accounting transactions of the organization are being identified in a proper and appropriate way.

            The activity of bookkeeping is being carried out by a bookkeeper who has to work towards recording of each of the transactions when the transactions occur and ensure that the records are being updated to a larger extent for the purpose of ensuring that, there is accurate preparation of financial statements at a particular point of time in the area of doing the tasks at a particular point of time.

  • Recording of transactions either on a cash basis or on credit basis
  • Helps in preparation of trial balance of the organization

The difference in Book Keeping and Accounting

Book Keeping


Recording of transactions

Ensuring that transactions are recorded in a summarized way

Constitution of the base of accounting

Considering the same as the language of business

No sub-field in the course of bookkeeping

Subfields include financial accounting

It is not possible to ascertain financial position of the organization

It is possible to identify an organizational financial position in a proper way.



  1. A complete record of books of accounts on the daily basis
  2. Helps in the determination of amount which the business owes to a particular person.
  3. Preparation of financial statements of the organization
  4. The financial effect of each transaction on financial statements is being identified
  5. Helps in providing information to the users
  6. Maintenance of updated information

Types of Entry Systems

  1. Single entry bookkeeping system
  2. Double entry bookkeeping system

ü  Single entry bookkeeping system: This particular system works towards ensuring that, transactions being recorded affect only one side of books of accounts. This is being considered as an incomplete form of accounting being carried out by the organization. This kind of accounting only includes cash, accounts receivables, and accounts payable being affected to a certain extent. This system is being used in small business organizations wherein only cash and debtors are being taken into consideration. The disadvantage of this system is that this system does not help in ensuring that, management decisions are being taken by the organizations in the area of doing the working.

ü  Double Entry bookkeeping system: In this case of the accounting system, the accounting is being carried out in the form of dual entry system. In this system, there is a corresponding entry to one entry. Each of the entries is being recorded at two places. This system ensures that all the debts are being equal to the credits. Dual entry system helps the management to ensure that, it carries out various kinds of decisions in the area of doing the tasks at a particular point in time.

Process of Book-Keeping

  1. Identification of business transactions: The first step is identification and analysis of source documents, events, and transactions which occur in the organization over a particular period of time.
  2. Journalizing the transactions: Once the analysis is being carried out, entries are being converted into journal entries and this is being done with a method wherein, for each debt, there is a credit and vice versa. An entry has two effects on two sides of the account books.
  3. Posting into ledger accounts: A ledger is being considered to be a principal book wherein, journal entries are being posted in different accounts. On the debit side, there is a corresponding credit on the other side.
  4. Preparing trial balance: A trial balance is a statement of ledger accounts and corresponding balances. The trial balance is being prepared for ensuring that, the sum of debits is equal to the sum of credits. This helps in verification of the fact that, all the entries are being recorded in a proper way without any kind of trouble or issue arising to the organization.


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