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Unit 1: Introduction to Accounting

3. Consumers: These groups are interested in getting the goods at reduced price. Therefore, Notes
they wish to know the establishment of a proper accounting control, which in turn will
reduce to cost of production, in turn less price to be paid by the consumers. Researchers are
also interested in accounting for interpretation.

4. Research Scholars: Accounting information, being a mirror of the financial performance of
a business organization, is of immense value to the research scholar who wants to make a
study into the financial operations of a particular firm. To make a study into the fi nancial

operations of a particular firm, the research scholar needs detailed accounting information

relating to purchases, sales, expenses, cost of materials used, current assets, current

liabilities, fixed assets, long-term liabilities and share-holders funds which is available in
the accounting record maintained by the fi rm.
1.6 Differences between Book-keeping and Accounting

As we discussed earlier that accounting is the process of identifying, measuring and communicating
the economic information of an organization to its users who need the information for decision
making. It identifies transactions and events of a specific entity. Before knowing the difference

between the accounting and book-keeping we should know the meaning and concept of book-
keeping.
Meaning and Definition of Book-keeping

Book- keeping includes recording of journal, posting in ledgers and balancing of accounts. All the
records before the preparation of trail balance is the whole subject matter of book- keeping. Thus,
book- keeping many be defined as the science and art of recording transactions in money or

money’s worth so accurately and systematically, in a certain set of books, regularly that the true
state of businessman’s affairs can be correctly ascertained. Here it is important to note that only
those transactions related to business are recorded which can be expressed in terms of money.
“Book- keeping is the art of recording business transactions in a systematic manner”.
– A.H.Rosenkamph

“Book- keeping is the science and art of correctly recording in books of account all those business
transactions that result in the transfer of money or money’s worth”.
– R.N.Carter

Objectives of Book-keeping

1. Book- keeping provides a permanent record of each transaction
2. Soundness of a firm can be assessed from the records of assets and abilities on a particular

date.
3. Entries related to incomes and expenditures of a concern facilitate to know the profi t and
loss for a given period.
4. It enables to prepare a list of customers and suppliers to ascertain the amount to be received
or paid.

5. It is a method gives opportunities to review the business policies in the light of the past
records.
6. Amendment of business laws, provision of licenses, assessment of taxes etc., are based on
records.

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