Family Economics and Consumer Education

Family Economics And Consumer Education 3 (2+1)

Lesson 08 : Account Keeping And Record Keeping

Importance of Account keeping

Record keeping is useful in the following ways in managing family income.

1. Record keeping is useful in knowing the exact amount of money spent on a particular item say food, fruits etc.
2. The family can know through record keeping the past expenditure in a particular emergency. This will give an indication of what the family may expect in future.
3. Records can serve as a control over family budget. Expenditure on a particular item may be in excess of the normal amount in the past this may help the family in curtailing the expenditure on such items in the future.
4. Families that keep records shall have clear picture about prices of various items and they can decide to buy at reasonable prices in suitable place and time. The records are useful in this direction and families can make wise decisions in purchase and price decisions.
5. Records are useful for income tax purposes. In certain cases information on household expenditure is needed for income tax returns.
6. They need not be elaborate but they should show clearly where the money is going.
7. If the expenditures are recorded with sufficient details they can be put to various uses.
8. The classification of food items serves not only as record of expenditure for food but also as a means of testing the adequacy of the diet in regard to nutritional requirements of the family members.
9. Without a record, a family has only an impressionistic estimate of how it has spent its money.
10. A study of records will show in which month the family has measured extra expenditure and why.
11. From the record the family will learn whatever it has made a wise buy or not. The records can be useful for income base purposes.

Expenditure of realized income in terms of money or cash expenditure and in terms of real income where goods form an appreciable part of the realized income where goods form an appreciable part of the realized income come under short term records . These records are called household accounts.

Long term records concern items of a permanent nature such as property owned, other investments and all indebt ness. The involved time period in these records is long hence a family may not be able to remember or recollect all expenditures it has made during the period. These records must be as complete and adequate as possible.