ACCOUNTANCY XI

Accountancy, Accounting and Book-keeping

Accountancy refers to a systematic knowledge of accounting. It explains “why to do” and “how to do” of various aspects of accounting. It tells us why and how to prepare the books of accounts and how to summarize the accounting information and communicate it to the interested parties. Accounting refers to the actual process of preparing and presenting the accounts. In other words, it is the art of putting the academic knowledge of accountancy into practice. Book-keeping is a part of accounting and is concerned with record keeping or maintenance of books of accounts. It is often routine and clerical in nature. 1.4.1 relationship between Accountancy, Accounting and Book-keeping Book-keeping provides the basis for accounting and it is complementary to accounting process. Accounting begins where book-keeping ends. Accountancy includes accounting and book-keeping. The terms Accounting and Accountancy are used synonymously. This relationship can be easily understood with the help of the following diagram.
A C C O U
N
T A N C Y
A C C O
U
N T I N G
B o o k k
e e p i n g
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1.4.2 distinction between Book-keeping and Accounting in general the following are the differences between book-keeping and accounting. Sl.No. Basis of distinction Book-keeping Accounting 1. Scope Recording and maintenance of books of accounts. It is not only recording and maintenance of books of accounts but also includes analysis, interpreting and communicating the information. 2. Stage Primary stage. Secondary stage. 3. Objective To maintain systematic records of business transactions. To ascertain the net result of the business operation. 4. Nature Often routine and clerical in nature. Analytical and executive in nature. 5. Responsibility A book-keeper is responsible for recording business transactions. An accountant is also responsible for the work of a book-keeper. 6. Supervision The book-keeper does not supervise and check the work of an Accountant. An accountant supervises and checks the work of the book-keeper. 7. Staff involved Work is done by the junior staff of the organisation. Senior staff performs the accounting work.

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