Book Keeping 

Bookkeeping is the recording of financial transactions like sales, purchase, income, receipts and payment by an individual or organization. Bookkeeping is usually performed by a book-keeper. The accountant creates reports from the financial transactions recorded by the book-keeper and files from the government agencies. Single entry book-keeping system and the double-entry book- keeping system are the methods of book-keeping. 

A book-keeper, also known as an accounting clerk or accounting technician, is a person who records day to day financial transaction of an organization. A book-keeper usually records the transaction in daybooks. The daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions recorded in the correct day books, suppliers ledger, customer ledger and general ledger. 

According to R.N Carter, “Book-keeping is the science and art of correctly recording in books of all those business transactions that result in a transfer of money or money`s worth.” 

Origin & Evolution of Book Keeping 

The origin of book-keeping cannot be exactly traced out. However, it can be said that the book-keeping history is as old as of money. It has been practiced from the ancient period. In ancient period, business are in small scale and book-keeping was not essential to that extent. The increasing demand and needs of human beings, as well as the practice of currency gradually, began to influence the business activities. Scientific book-keeping system was commenced in Italy some 500 years ago.  Venetian monk “Luca Pacioli” is known as “The father of modern book-keeping”.

Objective function of book-keeping: 

1. To have a permanent record of each transaction of the business.

2. To show the financial effect on the entity of each transaction recorded.

3. To ascertain the combined effect of all transactions on the financial position on a particular period.

4. To disclose the factors responsible for earning a profit or suffering a loss in a given period.

5. Determine tax liability of the business. 6. Prevention of errors and frauds. 

Importance or Functions of Book Keeping:

The importances of bookkeeping are as follows: 

1. Manage Disputes Between Owners and Managers 

Owners and managers are different person in an organization. They both have their own different interest. So, there may occur different disputes between them due to the difference in their interest. So, written records supported by documentary evidence are essential to avoid any mistrust or doubt among the owners and managers. 

2. Preparations of financial statements 

Business wants to know the profit earned or loss suffered during the year and its financial position at the end of the year. This is disclosed by income statement i.e. trading account, profit and loss account and balance sheet respectively. Book-Keeping records all the necessary data for preparing these statement. 

3. Limitation of human memory 

The capacity of human beings is limited as how much one can remember and that too for how long? Proper recording of records helps the business with the need of remembering. 

4. Need of financial information 

Book keeping is very important for the financial information and data are needed for cost ascertainment, planning, budgeting, and forecasting because it is the main source of such information. 

5. Need of taxation authorization 

Book – keeping records are regarded by the tax authorities as authentic and reliable for determination of tax liability.