Records of Financial Transaction only: -
Only those transaction andevents are recorded in accounting which is of financial character.There are so many transactions which are so important for business but which cannot be measured and expressed in terms of money andhence such transactions will not be recorded.(2)
Accounting is the art of recording businesstransaction according to specific rules. In a small business where thenumber of transactions is quite small, all transaction is first of allrecorded in book called “Journal”. But in a big business where thetransactions is quite large, the Journal is sub-divided in to varioussubsidiary books such as“Cash book” for recording cash transactions.“Purchase book” for recording credit purchases of goods.“Sales book” for recording credit sales of goods.“Purchase return book” for recording return of credit purchases.“Sales return book” for recording return of credit sales.(3)
After recording the transactions in journal thetransaction are classified. Classification is the process of grouping thetransaction of one nature at one place in separate accounts. The book in which various accounts are opened are called “Ledger”.