Sunday, May 22, 2022

2. Book Keeping Vs Accounting – Importance of Accounting

Hello dear students welcome to financial accounting classes for beginners today's class will see bookkeeping and accounting what is bookkeeping what is accounting and what's the difference between these two and also we are going to cover importance of accountancy now let me come to the bookkeeping .

Bookkeeping is the beginning stage or initial stage of accounting in the bookkeeping will be preparing main transactions like recording the transactions and also we are analyzing it the basic data information is to be provided in a proper systematic chronological order so this is the main function of .

Bookkeeping and bookkeeping anyone can maintain it but if they are having knowledge means knowledge in the sense how to prepare the accounts and what is the procedure if they have this much of knowledge they can become a bookkeeper they can start preparing this bookkeeping basics of accounting but there should .

Not be any kind of mistakes if any mistake occurs in bookkeeping which makes impact in the our next stages next level stages like preparation of final accounts and to decide the financial position to ascertain the profit or loss everywhere it makes the difference that .

Is why it has to be done very carefully in fact we can say bookkeeping is just like clerical work lot of work clerical work will be there but that is to be prepared properly once the if this is over then we can go for the accounting .

With the base of this bookkeeping financial accounting accounting can be prepared with this base we can prepare accounting like in accounting in further stages as we have discussed in the last class like further stages like branches of accounting financial accounting .

Cost accounting management accounting like we can prepare a lot so base is the bookkeeping we will see the difference between bookkeeping and accounting what is the main difference what are the main differences we'll see now the first difference is here in bookkeeping object .

If you see the object of bookkeeping it is to prepare original books of accounts original books of accounts they wanted to prepare trial balance and final accounts up to this only preparation of original books means writing the journal entries and also ledgers then after the trial .

Balance and final accounts only this is the main object of bookkeeping whereas if you see the accounting accounting objectives here to record to record classify summarize analyze interpret the business analysis vast object what what are the .

Objects first one is that to record the transactions and to classify as per the requirement and summarizing and analyzing and interpreting the total entire business so that is why you see the object is very vast whereas bookkeeping is very less only preparation of the basic data .

Trial balance and finance accounts that's it so this is the object of bookkeeping next if you see the scope bookkeeping scope is always limited its scope is limited because bookkeeping is to prepare only the original books accounts and trial .

Balance and balance sheet that's it final accounts not anything else so that is why its scope is very less limited scope and this accounting accounting scope is very wide not just preparation is not yet over after preparation they have to analyze they have to interpret .

And they can go in for the required data like comparison with the last year to this year comparison with one branch to another branch and profits they can compare and also they can prepare further accounts also like caster quantity management accounting .

And the required topics they can prepare it so that is why always accounting is having a wide scope whereas bookkeeping is here very limited scope third one if you see nature of work in bookkeeping lower level work will be there lower level clerks will be maintaining .

This bookkeeping lower level management lower level clerical people will be preparing this bookkeeping but whereas in accounting three levels you'll find first level lower middle and high level three levels of accountants will be .

Working over there lower level accountants what do they do is they prepare the main basics of accounting recording classifying then after that this middle level people they'll analyze the data they'll give the report they'll prepare the reports and then .

High level accountants they are taking the reports from the second level and they'll present the data to the management interpretation of data and giving the advices in a lucid form to the management like three levels you will find it in the accounts but here you will find only one .

Level that is lower level people only clerical work they'll do they need not to think about repair preparing the reports and submitting the reports advising and also interpreting all these things are not required here only lower level clerical work that's all now coming to the dependence .

Bookkeeping is independent they are not depending on anyone they do only the transactions recording and maintaining the basics of accounting they are independent they are not depending on anyone but here this is accounting is depending on the bookkeeping once .

Bookkeeping is over then based on this bookkeeping accounts will start accounts will prepare basic will get it from the bookkeeping only what is the basic will get it from the bookkeeping mainly journal entries classifying the enter classifying the data preparing the .

Journals trial balance and final accounts this is required this is preparing in the bookkeeping once if this is over then with this data we'll be preparing the accounts that is why we are saying depending on bookkeeping .

Next one results of business business related results like profits or losses financial position of the organization nothing is going to reveal this book keeping no results we can't analyze any kind of results from the bookkeeping but in accounting we can analyze the results .

We can analyze the operating results and financial position of the organization like operating results in the sense net profit or net loss and what is the financial position like we can compare it with last year to this year one branch to another branch one company to another company we can .

Analyze it so profit position will come to an and also financial position also by preparing for ratio analysis financial statements all these things will give you the financial status of the organization and also profit level of the organization also .

So that is possible only in accounting but not in bookkeeping no results you won't get these are the main five five differences between the bookkeeping and accounting this will give you the total in fact what is keeping what is accounting now next we'll discuss about .

Importance of accounting what is the importance why we have to prepare this accounts to whom it is useful accounts so that we'll see first person is that owners of the organization owners of the organization suppose i am the owner of company xyz .

If accounts are properly prepared i'll be getting the benefit like i'll come to know where is the problem how much profit i'm getting how much losses are there and how can i uh enhance the financial position of the organization how can i extend the company like all these things i can think about .

The organization where accounts are properly prepared so first benefit goes to the owners they'll get the picture clear clarity picture of the financial position of the organization they'll come to know if accounts are prepared properly so that is why first .

Benefit or importance of accounts goes to the owners of the business second one is that investors who are the investors anyone it can be xyz or some other persons i want to put my investments in the company .

But if the company is good then only i want to put my investments if it is not good i don't want to put investments how do i come to know whether the company is good or bad if properly accounts prepared and which are already certified by the auditors then it is reliable source of information .

With that information i can confirm that organization is good or bad in the previous first class i told you how we can decide just by looking at the balance sheet and what are the parameters to decide the financial position of the organization so if data is there we can decide it if .

I want to invest if data is there according to that i'm going to invest it so that is why investors will have the benefit and investors anyone it can be and next one is that creditors who want to give the loan to the company suppose say this company is their abc company .

In this company this company is applying for loan from any financial institution or any bank if accounts are properly prepared then only the creditors who wanted to give the loan these people are going to provide the loan to this .

Company means the properly prepared accounts will tell the financial position according to that how much we can sanction the loan and when they can rep repay back or are they in a position to repay the loan everything is weak and decided that is why .

Creditors any creditors who wanted to give the loan to the organization for them it is useful and also employees employees in the sense who are working in the organization they too want to know the financial position of the organization like i'm working in so-and-so company if .

Organization is good then only i can sit comfortably without any hesitation yeah financially company is good no doubt at all i get my salary every month i need not to worry about myself because of financial position sound financial position how do we come to know in a sound financial position because of the accounts so that is why .

It is important for the employees so that they feel it the safe to work in the organization they need not to think about the future they need not think about any other job any other organization because of this stability of the organization another importance is for the government why .

Government government also wanted to know the financial position of every organization how it is going on and how much profit they are earning and how much loss is there and do they require any kind of subsidies who are eligible for subsidies if accounts are clear then only they'll .

Decide it whom subsidies required whom we can give the license and how much profit they are earning based on the profit government is going to charge the tax excise duty etc etc that is why accounts are also useful for the .

Government next one is that public public is also interested and wanted to know the company's financial position if so and so companies good financially sound then only they wanted to buy those products it's going towards the profit and it's reliable .

Everything is they are going to decide that is why public also interested to know the financial position of the organization and also research scholars this financial accounting is useful for the research scholars how if they want to do any kind of research especially uh phd candidates .

And those who wanted to submit their projects and for everyone mba students also they wanted to submit the project they need some data based on that data they are going to do the research work they take all the data of companies then they'll compare it .

And they use it they can mold as per their requirement then then go for the research for research also data of financial accounting is required so for this scholars and next managers lastly who are the managers managers are those people who are handling the entire .

Organization who are taking the decisions who are running the organization towards the profits their main objective is to get the profit minimize the cost and they want to run the organization in efficient most efficient way .

So for them to take the decisions like different decisions like when to increase the price when to decrease the price and how much profit they are getting it and how to increase the profit if it is under loss how to overcome the loss like all these .

Things they'll be deciding so these are the main importance of accounting you can just take a screenshot or note down so dear students today we have discussed about bookkeeping and accounting the difference what is this and also importance of accounting in the further classes i'm going to .

Discuss in depth of financial accounting topics these are the basics which is very much required for everyone either the commerce student or management student even the non-commerce students non-management students also it is must needed .

Without basics you can't run the organization you can't take any kind of decisions in the higher level management so that is why which is required and in the coming classes i'm going to cover a lot of topics and different topics already i have covered so that link is given in the .

Description box please watch it utilize it watch it in computer like laptop computer or desktop computer so it will be much clearer for you to understand the subject so shortly i'll meet you with another topic till that period keep practicing well .

Stabilist good luck

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