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Book Keeping

Book Keeping

It is the art of recording the business transactions in a set of books systematically. The two systems in book-keeping are

  1. system of book-keeping and
  2. system of book-keeping
Advantages of book keeping

Art of Book Keeping

Advantages of Double-Entry System of Book Keeping

       i.          It is a complete systematic record

      ii.          In enables businessmen to find profit or loss at any time

     iii.          A trial balance can be prepared

    iv.          A balance sheet which indicates the current financial position can be prepared

      v.          It reveals the amount due to creditors and due from customers

    vi.          It discovers and prevents errors and frauds

   vii.          The tax authorities prefer double entry system only.

Single Entry System of Book Keeping

Single entry system of book keeping is the method of maintaining accounts which does not exactly follow the principles of double-entry system. Only the cash book and personal ledgers are maintained, i.e., the real and nominal accounts are not maintained under this sytem.

No fixed assets, purchases, sales, expenses, income accounts etc., can be found under this system. As trial balance cannot be prepared, the accuracy of accounts can’t be ascertained. No final account and balance sheet preparation is possible. Therefore, this system is  said to be unscientific  and not generally followed for purposes.

The set of books are

1. Journal

2. Subsidiary books

3. Ledger

4. Trial Balance and

5. Final Accounts.

What are Business Transactions?

Dealings of the business with the customers, another business, Government, other third parties and with itself.

For example

A transaction may be a credit or . The cash transaction involves cash (incoming or outgoing) whereas does not involve cash (no cash comes in or goes out).

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