Saturday, 23 January 2021

CH 6 - MEANING OF ACCOUNANCY BOOK KEEPING, ACCOUNTING AND ACCOUNTANCY

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(21) ACCOUNANCY BOOK KEEPING, ACCOUNTING AND ACCOUNTANCY

 

·        Meaning.

It refers to a systematic knowledge of accounting concerned with the principle and techniques which are applied in accounting. It tell us how prepared the books of account, how to summarize the accounting information and how to communicate it to the interested parties.

Accountancy is broad concept. Book Keeping is the recording branch of accounting. Accounting includes recording of transactions.

 

ਲੇਖਾਪਾਲਣ (Accountancy) ਇਕਕਿੱਤਾ ਹੈ, ਜਿਸ ਵਿੱਚ ਲੇਖਾਵਿਧੀ (Accounting) ਸ਼ਾਮਲ ਹੈ।

ਬਹੀਖਾਤਾ (Book Keeping) ਲੇਖਾ ਵਿਧੀ ਦਾ ਹਿੱਸਾ ਹੈ।

 

·        Definition:

“Accountancy is refers to the entire body of theory and process of accounting,” Kohler

“Every business enterprise has an accounting system. It is a means of collecting, summarizing, analyzing and reporting in monetary terms information about the business transaction.” Prof. Robert. N. Anthony.

 

·        Difference between Book Keeping and Accountancy:

Book Keeping

Accountancy

Identifying the transactions of financial nature, measuring it, recording the measuring transactions and classifying into ledger.

Book Keeping has a limited scope.

It provide detail of the daily transactions.

Book Keeping is clerical in nature and does not requires special skills.

Book Keeping requires the transactions for Jouralising and Posting.

It is body of knowledge prescribing certain rules or principles to be observed while recording, classifying and summarizing of transactions.

Accountancy has a wider scope.

Accountancy provides the details of whole year.

Accountancy is dynamic in nature requires special skill ability to analyses.

Accountancy requires all the accounting principle for profit and Loss and Balance Sheet.

 

 

·        Difference between Book Keeping and Accounting :

Book Keeping

Accounting

Identifying the transactions of financial nature, measuring it, recording the measuring transactions and classifying into ledger.

Book Keeping is Primary Stage.

Its main objective to maintain systematic record of transaction.

 

Book Keeping function is routine in clerical in nature.

Book Keeping function is performed by junior staff.

It can be performed by persons having limited level of knowledge.

Summarizing, Analysing, Interpreting the Summarized result and Communicating to interested Parties.

 

Accounting is Secondary Stage. It starts where Book Keeping ends.

Its main objective to ascertain the net result and financial position of the business.

Accounting function is analytical in nature

Accounting function is performed by senior staff.

It can be performed by person having higher level of knowledge.

 

·        Difference between Accounting and Accountancy

Accounting

Accountancy

It is concerned with recording classifying and summarizing of transactions.

 

It is narrow in scope.

It depends on book keeping.

Its main function is to ascertain the net results and the financial position of the business and to communicate them to interested parties.

It is body of knowledge prescribing  certain rules or principles to be observed while recording, classifying and summarizing of transactions

It is much wider in scope.

It depends both on book keeping and accounting

It includes the decision making function also on the basis of information provided by book keeping and accounting.