Book-Keeping, Accountancy and Auditing
Book-Keeping is the art of recording the business transactions in the books of original entry. It involves the process of recording all the transactions, journalising, posting to the relevant ledger accounts and balancing.
Accountancy involves the process of recording, classifying, summarising and interpreting all the financial transactions that take place during a particular period in a concern. It is the work of an accountant in maintaining financial books, checking of numerical accuracy of the books of accounts, preparation of trial balance, trading account, profit and loss account and balance sheet. Hence, it is commonly said “Accountancy begins where Book-keeping ends”.
Auditing involves a detailed and critical examination and verification of accounts by an independent and qualified person to ascertain the true and fair view of the financial position of the concern. For example after verification the auditor has to submit a report to the management that the financial statement represents a true and fair view of the statement of affairs of the business. Hence, it is said “Auditing begins where Accountancy ends”.