LECTURE - 2

Meaning of Accounting, Bookkeeping,

and Accountancy and their
differentiation.

By: Chitsimran 1
Lecture Outcome

Cognize the Distinguish

concept of between
bookkeeping, bookkeeping,
accounting and accounting and
accountancy. accountancy.

By: Chitsimran 2
Relevant NEWS

By: Chitsimran 3
 What is Book
Keeping?

By: Chitsimran 4
Meaning of Bookkeeping
◦ Book-keeping is the art of proper and systematic identification
and recording business transactions in the maintenance of book
of accounts (such as journal, ledger, cash and subsidiary books).
It is often routine and clerical in nature. The activities of
book-keeping include recording in the journal, posting to the
ledger and balancing of accounts.

By: Chitsimran 5
Definition of book-keeping
◦ Definition:
◦ “The art keeping permanent record of business transactions is
book keeping.”
◦ J. R. Batliboi: “book-keeping is an art of recording business
dealings in a set of books”.
◦ R. N. Carter: “Book-keeping is the science and art of correctly
recording in the books of accounts, all those business
transactions that results in transfer of money’s worth”.

By: Chitsimran 6
 How to do
book
keeping?

By: Chitsimran 7
Process of book keeping
◦ Identifying accounting transactions (which may be money or
money worth transactions with documentary evidence.
◦ Credit transactions are money worth transactions).
◦ Records Initial accounting transactions
◦ Preparation of ledger accounts
◦ Preparation of trial balance

By: Chitsimran 8
 Is Book-Keeping
and Accounting
Same?

Poll

By: Chitsimran 9
Meaning and definition of accounting
◦ Accounting definitions:
◦ As per AICPA Financial accounting is “the art of recording
classifying and summarizing in a significant manner in terms of
money transactions and events which are in part, at least of a
financial character and interpreting the results thereof”.
◦ As per AAA accounting is “the process of identifying, measuring,
and communicating economic information to permit informed
judgments and decisions by users of the information”.

By: Chitsimran 10
By: Chitsimran 11
 Can you
distinguish
between
book-keeping
and
accounting?

By: Chitsimran 12
 Difference b/w
book-keeping
and
accounting

By: Chitsimran 13
 Is Accounting
and
Accountancy
Same?

Poll

By: Chitsimran 14
 Accountancy refers to a systematic knowledge 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.
Accountancy,
Accounting and
Book-keeping is a part of accounting and is concerned with Book-keeping
record keeping or maintenance of books of accounts.

Book-keeping provides the basis for accounting. Accounting

begins where book-keeping ends. Accountancy includes
accounting and book-keeping. The terms Accounting and
Accountancy are used synonymously.

By: Chitsimran 15
MCQS
◦ Q1) According to The American Institute of Certified Public
Accountants which of the following is not considered as the part
of definition of Accounting.
◦ A) Recording
◦ B) Classifying
◦ C) Summarizing
◦ D) Recognizing
◦ ANSWER D
Q2) Which of the following highlights the correct order of the stages
in the accounting cycle?
A) Journalizing, final accounts, posting to the ledger and trial
balance
B) Journalizing, posting to the ledger, trial balance and final
accounts
C) Posting to the ledger, trial balance, final accounts and
journalizing
D) Posting to the ledger, journalizing, final accounts and trial
balance
◦ ANSWER B
◦ Q3) The first step in accounting process is
◦ A) Recording the transaction
◦ B) Identifying the transaction
◦ C) Posting the transaction
◦ D) Preparing the source documents
◦ ANSWER B
Q4)The process of recording is done
◦ a)Two times a year
◦ b)once a year
◦ c)Frequently during the accounting period
◦ d)At the end of a accounting period
◦ ANSWER C
 Any Queries??

By: Chitsimran 25