Book-keeping, Accounting, and Accountancy

What is Book-keeping?

1. Book- Keeping

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

2. Characteristics of book-keeping

It is mainly the work of recording the transactions of the business in the books of accounts. (Book-keeping Accounting and Accountancy)
It involves following four steps-
- Identification of the transactions of financial nature from the various transactions.
- Measuring the transactions in terms of money.
- Recording the identified transactions in the books of original entry.
- Classifying the recorded transactions on the basis of nature and recording them into the ledger.
It is a clerical work in nature, hence does not requires any special qualification or knowledge.
Now these days, generally this work is done through computer softwares like Tally ERP, Busy etc.
This is the primary stage of the whole accounting process.

1. Accounting

“Accounting refers to summarizing, interpreting and communicating the financial information to the users of such financial information.”

2. Characteristics of Accounting

Accounting begins where the book-keeping ends. This means it is the step after book-keeping.
It involves following four steps-
- Summarising the transactions in the Profit & Loss Account and Balance Sheet etc.
- Analyzing and interpreting the financial data which is summarised in the above accounts. In other words, this is the step where the relevant meaning or conclusion is drawn from the financial statements.
- Communicating the financial information to the users of such financial information like banks, governments, lenders, etc.
This work is analytical in nature hence requires special qualification or knowledge. (Book-keeping Accounting and Accountancy)

Accountancy
- Accountancy is the systematic body of knowledge that consists of principles and techniques on the basis of which accounting is done.
- Accountancy refers to the entire body of the theory and practice of accounting. – Kohler
Characteristics of Accountancy
- It includes accounting principles and techniques.
- It provides knowledge on “how to perform the accounting function.

Basis	Bookkeeping	Accounting
Meaning	Book-keeping is the art of recording business transactions in a set of books.	Accounting refers to summarizing, interpreting and communicating the financial information to the users of such financial information.
Stage	It is the primary step of the whole accounting process.	Accounting begins where the book-keeping ends. Means it is the second step.
Objective	It is done for maintaining systematic records of financial transactions.	It is used to ascertain the profit or loss and the financial position of the business.
Nature	This work is a routine and repetitive in nature. Hence it can be don’t without having any analytical skills.	This work is analytical in nature. Hence requires analytical skills.
Knowledge required	Bookkeeping does not require special knowledge. A person with normal qualifications can do this work easily.	It requires specialized knowledge to analyze the financial data.
Performed by	It is performed by Junior Staff.	It is performed by senior staff.

Basis	Accounting	Accountancy
Meaning	Accounting refers to summarizing, interpreting and communicating the financial information to the users of such financial information.”	It is the systematic body of knowledge which consist of principle and techniques on the basis of which accounting is done.
Scope	It has a narrow scope than accountancy.	It has a wider scope than accounting. As it includes accounting as well as book-keeping.
Objective	It is used to ascertain the profit or loss and the financial position of the business and communicate the same to the users of such financial information.	It ensures book-keeping and accounting to be done on the basis of some specific rules and standards.