Maintenance of Records of Business Transactions

Accounting exists because no human memory can reliably hold the thousands of transactions — purchases, sales, receipts, payments — that a business handles every day. The first and most basic purpose of accounting is to create a systematic, written record of every financial transaction in a set of books of accounts.

This record is not optional. It is kept regularly and completely, for two concrete reasons:

• Verifiability — any transaction can be checked against the original record (a bill, a receipt, a contract). Without a written entry, there is nothing to verify.
• Evidence — the books of accounts serve as legal proof of what happened. In a dispute, an audit, or a tax assessment, the recorded entry is the primary evidence.

The key point is that the record must be proper (following the rules of double-entry bookkeeping) and complete (no transaction omitted). A partial or sloppy record defeats the purpose. …