The word “Accounts” is used in general to represent the terms Book – Keeping”, Accounting and accountancy.

So the very first thing is to understand the meaning of these three words so as to be able to differentiate between these three terms and to understand the subject in a conceptual manner.

Book – Keeping:

Book – Keeping is the process of recording the activities of the business in the books and records of the business and maintenance of these books and records.

Accounting:

Accounting begins where Book – Keeping ends. Whereas Book – Keeping consists of recording the activities of the business, Accounting is concerned with the results of these activities.

The activities of the business results either in profit or loss which are determined at regular intervals, usually a year which in business terms, referred to as Accounting Year. Accounting is the process of determining profits or loss that has taking place during an accounting year and the financial position of the business represented by the assets owned and liabilities incurred by it on the last day of the accounting year. The profits or loss are shown by a statement called “Profit and Loss Account” or “Revenue Statement” and financial position is represented by a statement called “Balance Sheet”

Accountancy:

Whereas Book – Keeping and Accounting are the process of recording the activities of the business and deriving the results thereof, Accountancy is the systematic study of Book – Keeping and Accounting process. The systematic study comprises of framing of rules, laws and designing the procedure to be followed while performing the operations of Book – Keeping and Accounting. So whereas Book- Keeping and Accounting are processes, Accountancy is a subject as a whole of which Book –Keeping and Accounting are a part.