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Note on Book Keeping

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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.

  • 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. 
  • Book-keeping helps to make correct assessment of income tax.
  • Book-keeping helps to disclose true financial position of the business on a given date.
  • Book-keeping is concerned with classifying the financial transactions into personal, real and nominal accounts. 
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Very Short Questions

A business organization performs a large number of financial transactions on a regular basis. These financial transactions relate to buying, paying expenses, receiving incomes, acquiring assets, meeting liabilities and collecting dues. The accountant or owner of the business cannot keep in memory all these transactions. So, such financial transactions are recorded systematically in a set of the book for future reference.

The following are some of the main definitions of book keeping:

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

According to Rosenkamp, "Book- keeping is the art of recording transactions in a systematic manner."

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

The following are the main objectives of book-keeping:

  1. To keep permanent records
    Book keeping is concerned with maintaining records of all financial transactions of a business. Such records are used for making different types of financial decisions.

  2. To classify transactions
    Book-keeping is concerned with classifying the financial transactions into personal, real and nominal accounts. Such process of classifying the transactions help in obtaining required information easily and immediately.

  3. To help to determine true profit or loss
    Book-keeping helps to determine correct profit or loss of the business during a year. For this, it supplies information relating to income and expenses.

  4. To help to disclose true financial position
    Book-keeping helps to disclose true financial position of the business on a given date. For this, it supplies information relating assets, liabilities and capital.

  5. To supply information
    Book-keeping supplies required data and information to the management and other concerned parties whenever required. Such information is required for preparing financial plans and making decisions.

  6. To help to access correct amount of tax
    Book-keeping helps to make correct assessment of income tax. It supplies accurate and reliable information relating to incomes, expenses, profit or loss on the basis of which the correct amount of income tax is determined.

The following are the objectives of book-keeping:

  1. To keep permanent records of all the financial transaction of a business.
  2. To help to assess the correct amount of tax.
  3. To supply information to the concerned parties whenever required.
  4. To help disclose the true financial position of the business on a given date.
  5. To help to determine correct profit or loss.
  6. To classify transactions into real, personal and nominal account.

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  • Liability accounts will normally have __________ balances.

    credit


    none of the options are correct


    equal


    debit


  • ______ is the art of recording, classifying and summarizing the transactions and events of a business and interpreting the results thereof.

    Auditing


    Book-keeping


    Managing


    Accounting


  • In order to achieve the stated objectives, an organization requires utilizing its ______ in the best possible manner.

    other resources


    human


    financial 


    all the options are correct


  • 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." Who gave this definition?

    J. R. Batliboi


    R.N. Carter


    Rosenkamp


    A.N. Agrawal


  • "Book- keeping is the art of recording business dealings in a set of books." Who gave this definition?

    J. R. Batliboi


    Rosenkamp


    R.N. Carter


    A.N. Agrawal


  • Which one of them is the objective of book-keeping?

    To supply information


    All the options are correct


    To classify transactions


    To keep permanent records


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surose carkey

To understand the Second objective of book keeping, first we should know what is personal ,real and nominal account?


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