Q.Explain the meaning of Book-Keeping. State its main features.

Book-keeping is where the whole subject of accounting begins — it is the basic, routine recording function every business needs.

Book-Keeping is the art and science of identifying, measuring, recording and classifying business transactions of a financial nature, in a set of books, in a systematic and chronological manner. Its main features are that it deals only with transactions of a financial (money) nature, it is recorded in a set order based on date, and it is essentially a clerical, routine activity performed by a book-keeper.

Book-Keeping is the art and science of identifying, measuring, recording and classifying business transactions of a financial nature, in a set of books, in a systematic and chronological manner. It is the starting point of the entire accounting process — before any classification, summarising or analysis can happen, transactions must first be recorded accurately.

The main features of Book-Keeping are:

1. It records only financial transactions — events or exchanges that can be expressed in terms of money; non-monetary events, however significant, are outside its scope.
2. It is recorded chronologically — in the order in which transactions actually occur, dated correctly.
3. It is systematic — transactions are recorded following defined rules (the rules of debit and credit under the Double Entry System), not haphazardly.
4. It is a routine, clerical function — carried out on a day-to-day basis by a book-keeper, and does not, by itself, require the higher-level analytical judgement that accounting proper requires.
5. It forms the basis for accounting — the summarised statements (Trading and Profit and Loss Account, Balance Sheet) prepared under accounting are built entirely on the accuracy of the underlying book-keeping records.

Students often describe Book-Keeping using the wider work of Accounting (e.g. "it tells us the profit of the business") — Book-Keeping stops at recording; ascertaining profit/loss and financial position is the job of Accounting, not Book-Keeping.