Chapter: 11th Auditing : Chapter 1 : Introduction to Audit
Book-Keeping, Accountancy and Auditing
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”.
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