Introduction to Bookkeeping and Accountancy

Study Notes

Bookkeeping in Accountancy

The primary purpose of bookkeeping is to record financial transactions systematically to maintain accurate financial records.
It ensures that all monetary activities of a business are documented for reporting and decision-making.

Relationship Between Bookkeeping and Accountancy

Bookkeeping serves as the foundation of accountancy by providing the necessary data for financial analysis and reporting.
While bookkeeping focuses on the recording of transactions, accountancy encompasses broader responsibilities such as interpreting, classifying, and summarizing financial data.

Functions of Bookkeeping

Functions typically associated with bookkeeping include maintaining transaction records, reconciling bank statements, and managing accounts payable and receivable.
Functions NOT typically part of bookkeeping include conducting audits, preparing budgets, and analyzing financial performance.

Ledger in Accountancy

A ledger is a book or digital file used to record all financial transactions categorized by accounts.
It serves as a comprehensive summary of all financial activity and includes various accounts such as cash, expenses, and revenues.

Foundational Principle for Bookkeeping and Accountancy

The double-entry system is the foundational principle for both bookkeeping and accountancy, ensuring that every transaction affects at least two accounts to maintain balance.
This principle supports the accuracy and integrity of the financial records.

Description

Test your knowledge on the fundamentals of bookkeeping and accountancy. This quiz covers key concepts such as the purpose of bookkeeping, the relationship between bookkeeping and accountancy, and foundational principles in the field. Enhance your understanding of how these practices interrelate.