The primary aim of any business organization is to earn as much profits as it can by incurring minimum losses. A commercial organization, at all times, will try to expand its business influence, try to increase its sales volumes, and cut down the operating expenses. The progress made in this regard is always made possible by a properly maintained financial bookkeeping system. In the early days, the main objective of a good accounting system was to ascertain the result of the various business activities. People just wanted to know whether profit has been earned during a particular period or year. Accounting systems around the world have to meet the requirements demanded of by the taxation authorities, the investors, and the general public. This has resulted in the widening of the range and scope of accounting activities. Bookkeeping takes care of recording and summarizing the money transactions or business events which are of a financial character and interpreting the outcome that ensue.
Some have the doubt whether bookkeeping is a science or an art.Since bookkeeping does not take into consideration the cause and effect relationship, it only provides us with a particular procedure. With this, the objectives of accounting can be achieved; therefore, accounting is called an art, not a science. Bookkeeping is really an art of recording the various financial transactions in the account books; these details are then classified into desired categories. Later, the information is summarized to be presented in a suitable manner to the persons concerned for their benefit. The scope of bookkeeping and accounting has been on the increase, and the need for a system of proper bookkeeping was felt very early in the history of trade and commerce. The art of keeping accurate records passed through many stages since its inception. With globalization and the worldwide development in the field of commerce, it has attained a position of great significance. In fact, it is truly said that bookkeeping has become the foundation on which the entire fabric of modern trade rests.
Each and every business corporation finds it essential and convenient to keep perfectly systematic bookkeeping records so as to know their exact position. Apart from that, it is legally binding for businesses such as stock companies to prepare statements in proper forms in a periodic way thereby showing the position of the financials of the business. A proper and satisfactory method of bookkeeping is a highly essential part for any business house due to the following reasons. If no proper bookkeeping records are kept, it will be difficult to assess the accurate profit. In these circumstances, tax authorities are likely to prepare an overestimate of the profits. As a result, the trader will suffer for not keeping business records in the apt manner. In their absence, the trader is likely to find it difficult to submit the real situation to the court in the case of his becoming insolvent. Only a properly kept system of financial recording which takes care of all business transactions will help the owner in his path forward.