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(a) Differentiate between book keeping and accounting. (b) Discuss the objectives of accounting and book keeping in the farm.

      

(a) Differentiate between book keeping and accounting. (b) Discuss the objectives of accounting and book keeping in the farm.

  

Answers

abigealmuinde
(a)“Book-keeping is the science and art of correctly recording in books of account all those business transactions that result in the transfer of money or money’s worth while“ accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are, in part at least, of a financial character and interpreting the results thereof”.
(b)(I)importance's of accounting
introduction

Objective of accounting may differ from business to business depending upon their specific requirements. However, the following are the general objectives of accounting.
i) To keeping systematic record: It is very difficult to remember all the business transactions that take place. Accounting serves this purpose of record keeping by promptly recording all the business transactions in the books of account.
ii) To ascertain the results of the operation: Accounting helps in ascertaining result i.e., profit earned or loss suffered in business during a particular period. For this purpose, a business entity prepares either a Trading and Profit and Loss account or an Income and Expenditure account which shows the profit or loss of the business by matching the items of revenue and expenditure of the some period.
iii) To ascertain the financial position of the business: In addition to profit, a businessman must know his financial position; that is, availability of cash and position of assets and liabilities. This helps the businessman to know his financial strength. Financial statements are barometers of health of a business entity.
iv) To portray the liquidity position: Financial reporting should provide information about how an enterprise obtains and spends cash, about its borrowing and repayment of borrowing, about its capital transactions, cash dividends and other distributions of resources by the enterprise to owners and about other factors that may affect an enterprise’s liquidity and solvency.
v) To protect business properties: Accounting provides up to date information about the various assets that the firm possesses and the liabilities the firm owes, so that nobody can claim a payment which is not due to him.
vi) To facilitate rational decision–making: Accounting records and financial statements provide financial information which help the business in making rational decisions about the steps to be taken in respect of various aspects of business.
vii) To satisfy the requirements of law: Entities such as companies, societies, public trusts are compulsorily required to maintain accounts as per the law governing their operations such as the Companies Act, Societies Act, and Public Trust Act. Maintenance of accounts is also compulsory under the Sales Tax Act and Income Tax Act.
2.objectives of bookkeeping
i) Book- keeping provides a permanent record of each transaction.
ii) Soundness of a firm can be assessed from the records of assets and abilities on a particular date.
iii) Entries related to incomes and expenditures of a concern facilitate to know the profit and loss for a given period.
iv) It enables to prepare a list of customers and suppliers to ascertain the amount to be received or paid.
v) It is a method that gives opportunities to review the business policies in the light of the past records.

jahby answered the question on November 19, 2018 at 06:37

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