Accounting Cycle

In accounting certain steps are to be followed which are repeated year after year. These are:

Recording of transactions and events in the books of accounts- journalising;

Grouping of similar items and transferring to their respective account - posting;

Summarising the accounts - balancing; Checking the arithmetical accuracy - preparing the trial balance; Adjusting the unrecorded items - passing adjustment entries; Closing books of account to find out the result - preparing final

accounts.

All these above steps constitute accounting cycle.

Meaning of Book Keeping

Book Keeping is the task of recording, classifying and summarising (upto trail balance) of financial transactions and events. It is a part of accounting or can be called as the fundamental pillars of accounting. Since in earlier days, these financial transactions and events were written in the logn Bahi Books, registers, copies hence these were known as book keeping.

Now the form of keeping is getting changed by the advent of technology and these transactions and events are recorded and procesed through computers but still the subtance remain the same and so about the key word "Book Keeping."

Meaning of Accounting, Difference between book keeping and accounting

Accounting may be defined as

The task of recognising, measuring, recording, classifying, summarising, analysing, interpreting and communicating the various financial transactions and events.

Difference between Accounting and Book Keeping

Hence the starting or basic task or part of accounting i.e. recognising, measuring, recording, classifying, summarising is called as book keeping while the advanced stage or post stage of book keeping is known as accounting.

The accounting can never take place unless book keeping is done just like a house can not be constructed without basic or initial stages of flooring, walls and roofs.

The users are normally not concerned about book keepinng but have the interest in the result that is summarised informations which are normally presented in the form of following statements:

1. Balance Sheet

2. Statement of Profit & Loss

3. Statement of cash flows

And moreover the analysis, interpretation of these statement with the help of addtional disclosures and presentation.

Bookkeeping

Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, receipts and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Many individuals mistakenly consider bookkeeping and accounting to be the same thing. This confusion is understandable because the accounting process includes the bookkeeping function, but is just one part of the accounting process.[1] The accountant creates reports from the recorded financial transactions recorded by the bookkeeper and files forms with government agencies. There are some common methods of bookkeeping such as the single-entry bookkeeping system and the double-entry bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.

A bookkeeper (or book-keeper), also known as an accounting clerk or accounting technician, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing the "daybooks". The daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions

are recorded in the correct day book, suppliers ledger, customer ledger and general ledger.

The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.