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Book-keeping, Accounting and Accountancy

Accountancy is a broader term. It includes accounting which in turn includes book-keeping. These three are sometimes considered as synonymous i.e., having the same meaning. However, there is a fundamental difference amongst book-keeping, accounting and accountancy.


According to North Cott ,“Book-keeping is an art of recording in books of accounts the monetary aspect of commercial or financial transactions”. It is mainly concerned with record keeping or maintenance of books of accounts. The maintenance of books of accounts includes the following four activities:

  • Identifying the transactions of financial nature from among the various transactions.
  • Measuring the identified transactions in terms of money.
  • Recording the indentified transactions in the books of original entry.
  • Classifying them into ledger. The book-keeping function is routine and clerical in nature and can be performed by persons having limited knowledge of accounting. At present this function is increasingly done by computers.


Accounting starts where book-keeping ends. It includes the following activities:

  • Summarizing the classified transactions in the form of Profit & Loss Account and Balance Sheet, etc.
  • Analyzing and interpreting the summarized results. In other words, drawing the meaningful information from Profit & Loss Account and Balance Sheet etc.
  • Communicating the information to the interested parties.

Thus an accountant’s work goes beyond that of a book-keeper. However, in actual practice the accounting process includes the book-keeping function also because on the basis of book-keeping records, an accountant draws up periodically such financial statements as Profit & Loss Account and Balance Sheet. In a small concern, the accountant performs the work of a book-keeper also.


It refers to a systematic knowledge of accounting concerned with the principles and techniques which are applied in accounting. It tells us how to prepare the books of accounts, how to summarize the accounting information and how to communicate it to the interested parties. According to Kohler, ‘accountancy refers to the entire body of the theory and practice of accounting.’

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