Book of Accounts is a book where you record all the financial transactions of the business. Entries in the books of accounts are required to be supported with documents such as official receipts, sales invoices, vouchers and other related supporting documents evidencing the business transactions occur. All persons engaged in trade, business or profession are required.
Every company shall prepare and keep its books of accounts & financial statement for every financial year which give a true & fair view of the state of the affairs of the company and explain the transactions & the accounts shall be kept on accrual basis on double entry system of accounting.
Importance of maintaining of books of accounts:
£ A well-kept record means tax savings.
£ Good accounting records act as backup for all income & business expenses incurred in time of audit.
£ Good records shorten the length of time that an audit takes to be completed.
£ Good record keeping complies with the law.
£ Records keep owners informed about their businesses financial position.
£ Avoid interests and penalties.