Identification and recording of financial transaction is called ‘Book-Keeping’. The term Book-keeping is often jumbled up and confused with the term accounting. In fact it is one of the basic functions of financial accounting. Scope of financial accounting is far bigger than that of book keeping. (For detail scope of financial accounting, please refer to the topic of ‘Introduction to financial accounting’). There are two systems used for book keeping namely;
- Double Entry Book-keeping
- Single Entry Book-keeping
In Double Entry Book-keeping System financial transactions are recorded by passing a double entry in which at least one account is ‘Debited’ and another is ‘Credited’. While in Single Entry Book-keeping system, single entry is passed which update only one account. Double Entry Book-keeping is more appropriate and comprehensive approach for book-keeping thus this system is used in most of the small, medium and large size entities. Only those business/entities follow single entry book-keeping system where operations are very simple in nature and only few financial transactions occur.
Author: Zuhair Afzaal
Studied Chartered Accountancy and now Pursuing Professional Career as Financial Consultant, Manager Accounts and Finance. A teacher by passion and likes to make things easier for students by publishing courses and lecturing in on-campus and online classes
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