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  • Book-keeping involves the following process:

1. Identifying accounting transactions. All business transactions which are financial in nature and have documentary proof are accounting transactions. Non-economic activities concerning emotions of love, patriotism and respect do not find place in Book-keeping.

2. Initial record of accounting transactions. The identified accounting transactions are passed through subsidiary books, such as purchases book, sales book. Returns inward book Returns outward book, bills receivable book, bills payable book, cash book and journal proper.

3. Preparation of ledger accounts. All the transactions relating to a particular person, party or item are put together at one place under one head, which is known as its ledger account. For example, information regarding sales to Imti, amount received from Imti, discount allowed to Imti and so further sales and receipt of the amount should be written in Imti ‘s Ledger Account. This will enable us in understanding the actual position of Imti ‘s dealings at a glance. With the help of subsidiary books and journal proper all ledger accounts are prepared.

4. Balancing ledger accounts. Ledger accounts are balanced i. e., the difference between the debit and credit side of the ledger accounts is ascertained. Personal accounts show the amount payable to or receivable from them. Assets accounts show the value of assets on a particular date. Ledger accounts. Thus, reveal the balances of expenses, revenue, liability Capital and assets.

5. Preparation of trial balance. Trial balance is prepared with the balances shown by the ledger accounts. While passing journal entries and preparing subsidiary books we take into consideration the dual aspect of every transaction, so the debit and credit balance of the trial balance must tally. Trial balance is prepared to check arithmetical accuracy. If the totals of the debit and credit side of the trial balance are not equal, there must be certain errors. These errors are located and rectified.