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In accounting certain steps are to be followed which are repeated year after
year. These are:
Recording of transactions and events in the books of accountsjournalising;
Grouping of similar items and transferring to their respective account posting;
Summarising the accounts - balancing;
Checking the arithmetical accuracy - preparing the trial balance;
Adjusting the unrecorded items - passing adjustment entries;
Closing books of account to find out the result - preparing final
accounts.
All these above steps constitute accounting cycle.
Now the form of keeping is getting changed by the advent of technology and
these transactions and events are recorded and procesed through computers
but still the subtance remain the same and so about the key word "Book
Keeping."
The accounting can never take place unless book keeping is done just like a
house can not be constructed without basic or initial stages of flooring, walls
and roofs.
The users are normally not concerned about book keepinng but have the
interest in the result that is summarised informations which are normally
presented in the form of following statements:
1. Balance Sheet
2. Statement of Profit & Loss
3. Statement of cash flows
And moreover the analysis, interpretation of these statement with the help of
addtional disclosures and presentation.
Bookkeeping
Bookkeeping is the recording of financial transactions. Transactions include
sales, purchases, income, receipts and payments by an individual or
organization. Bookkeeping is usually performed by a bookkeeper. Many
individuals mistakenly consider bookkeeping and accounting to be the same
thing. This confusion is understandable because the accounting process
includes the bookkeeping function, but is just one part of the accounting
process.[1] The accountant creates reports from the recorded financial
transactions recorded by the bookkeeper and files forms with government
agencies. There are some common methods of bookkeeping such as the
single-entry bookkeeping system and the double-entry bookkeeping system.
But while these systems may be seen as "real" bookkeeping, any process that
involves the recording of financial transactions is a bookkeeping process.
The bookkeeper brings the books to the trial balance stage. An accountant
may prepare the income statement and balance sheet using the trial balance
and ledgers prepared by the bookkeeper.