What is Book-keeping and what are its objectives and utility?

What is Book-keeping and what are its objectives and utility?

Friends, today we will have talk to you about Book-keeping. Because, it is the first chapter of starting accountancy. In addition, we will also discuss the difference between book-keeping and accountancy?

In India, during the rule of Chandragupta Maurya, the minister Kautilya wrote a book called ‘Arthashastra’, where in some contexts the way accounting records are maintained. The name of that book was later called as “Desi Name”.

Introduction of Book-keeping:

Book-keeping is a record of business transactions. In other words, business enterprise and other organizations deal in activities which involves exchange of money or money’s worth.

In addition, all these are record for the purpose of taking important decisions. For example – this activities are feasible, profitable and are to be continues or not.

In fact, apart from the business owner and managers of the business, various other stakeholders like government, investors, customers, employees and researchers are also require.

Friends, Friends, now let us explain its meaning in simple terms –

In simple words, the ‘Book- Keeping’ means recording of the business transactions in the books of accounts in systematic way. In addition, all the transactions are recording date wise. Because, accurate business results from records at the end of accounting year.

In fact, Book-keeping is an art or science of of systematic recording, classifying and summarising. In addition, it is show the financial transactions of business for a particular period, generally one year.

According to J. R. Batliboi: “Book-keeping is an art of recording business dealings in a set of books”.

Features of Book-keeping:

Friends, now you understand its feature. Based on the above definition, its feature is as follows –

1. Only financial transactions recording.
2. Recording day to day business transactions.
3. All records are preparing for a specific period.
4. These records are useful for future reference.
5. Its records are base on rules and regulations.
6. It is an art of recording business transactions with scientifically.

Objectives of Book-Keeping:

Friends, there is no such discovery in the world, which has been made without any purpose. Therefore, book-keeping also prepares the businessman for his particular purpose. So let’s also know those objectives –

Complete and Accurate record:

It is the main objective of book-keeping because, it is keep a complete and accurate record of all financial transactions. Not only this, it not only keeps accurate records but also keeps those finacial transactions systematic, orderly and logical manner.

Date wise and Account wise record:

All the business transactions are to be record date wise and account wise. For examples:- If you have withdraw from bank as on 01.08.2020 and another withdraw 10.08.2020. Also, you bought the goods on 05.08.2020. Then entries will be serial date wise.

Serves Permanent Record:

Book-keeping serves as a permanent record of monetary transactions of an enterprise business. And apart from this, it is present as evidence whenever and wherever necessary.

To Know Profit & Loss:

The main objective of every business is to earn profit. You get information on profit and loss during the financial year.

Business Assets and Liability Information:

How much is your business assets besides, how much is the liabilities? You get full information about it.

Progress Information:

Book-keeping is the basis of accounting. Therefore, it plays an important role in business growth as it gives accurate information to management.

Importance of Book-keeping:

Business Record:

It is maintains records of all transactions. In addition, all these records are maintains permanently and systematically in the book of accounts. Because, friends it is not possible for anyone to remember all transactions.

Financial status information:

If you keep this record in your business. Then book-keeping will give all kinds of financial information. This information will be found at any given time. For example – Profit, Loss, Assets, Liabilities, Investment and stock, etc.

Helpful in Business Decision:

Book-keeping plays a proper and important role in decision making in your business because, it gives you accurate information about the financial position of the business. This way you will know when, where and what type of decision will be beneficial for your business.

Assistants in business control:

Friends, book-keeping helps in better control of your business apart from knowing the economic status of the business. For example, if you got a profit or loss in business. In both cases, better coordination between employees is made because everyone is aware of business problems. So they try to improve their product. In addition, we also try to increase production capacity. Your business benefits from increased employee efficiency. If there is profit in the business then the salary of the employees will increase.


Business does not just run from your better products and more production or more sales. The financial evidence of your business is the greatest evidence. Because, based on this, the customer, investor, stakeholder and your competitor understands the potential of your business. Also, in case of any dispute, it will be able to present it to the court as evidence.

Assistance in tax calculation:

Without business records in business, you will not be able to calculate tax and no income tax department will trust your business. Hence book-keeping is very useful in tax liabilities. For example, Income tax, Property tax, GST, etc.

Utility of Book-keeping:


Easy to find profit and loss, assets and liabilities to the owner.


Easy to plan, take decisions and control overall business activities.

Ease in making appropriate decisions as to whether to invest or not.

It will be confident about the supply of goods because, it will easily understand the financial condition of the business.

It is easy to find different types of taxes from different sources.

Money lenders decide whether to lend money or not.


Professional development and growth with the help of accounting.

Difference between Book-Keeping and Accountancy

Friends, some students make the mistake of considering book-keeping and accounting the same. But there is nothing in common between these two. Understand this further –


In the simplest sense, book-keeping is the record and classification of business transactions.
While accounting is the recording, classification, summarising, analysis and intervention of financial data.


Friends, Book-keeping is the primary stage in accounting. In other words, it is the base for accounting.
But in accountancy, apart from the primary stage, it includes all stages such as analysis and interpretation.


The objective of Book-keeping is to keep the records of all financial transactions in properly and systematically.

But, the objective of accounting is to prepare the financial statement. In addition, it is also provides further information to the relevant authorities.


In book-keeping, junior staff is responsible for keeping records.

But in accounting, senior staff is responsible for keeping accounts.


Book-keeping basically results in Journal and Ledger.

The results of Accountancy is Profit and Loss A/c and Balance sheet.


Book-keeping gives day to day details.

Accountancy gives details of entire year.


The process of Book-keeping does not require any analysis.

But, Accountant use Book-keeping information to analyse data.

Decision Making:

Management cannot take a decision based on Book-keeping records.

But, he can take critical business decision based on data provided by Accountant.

Skill Requirements:

Skill is not requires for Book-keeping. But in accounting, it requires analytical skill.

Read more articles: Purchases and Sales Journal EntriesJournal Entries and its Rules Accounting and its Feature, Function, Objectives and RequirementsJournal Entry of Discount AccountTrade and Cash Discount and How to Journal Entry of its in Purchase and Sales,  journal entries of banking transactions

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