Disadvantages or Limitations Of Double Entry System

Following are the disadvantages or limitations of double entry book-keeping system

a)No record of all business activities: Under this system, all the business activities cannot be recorded. It records only the financial transactions and ignores non-financial qualitative activities of business.

b)Difficulty in corrective actions: Under double entry system, financial statements are prepared after the expiry of the accounting period.

Importance Of Advantages of Double Entry System

The following are the importance or advantages of double-entry book-keeping system 

a)Keeps complete record of each transactions: Double entry system of accounting presents a complete record of transactions. It records all financial transactions by dividing them into three accounts i.e. personal, nominal and real account. similarly, it records both aspects of such transactions to revel a complete and clear picture of an organization.

b)Ascertains the results of business operations:

Objectives of Double Entry System

The following are the objectives of double entry book-keeping system

a)To keep the complete records of every financial transactions systematically and scientifically

b)To ascertain the profit and loss of the organization

c)To provide real picture about the financial position of the organization

Features of Double Entry System

Fooling are the features or characteristics of Double entry book keeping system

a)Double effect :It follows the principle of double aspects by debiting and crediting the transactions .Every transaction must have two fold effect debit and credit .So it has the effect of duality in accou9nting system.

b)Equal effect: It assumes that debit must be equal to credit amount i.e. it considers the effect of equal amount on both sides of accounts. In other words, the same amount is shown on debit and credit.

Concept and meaning of double entry system

Book keeping is the branch of knowledge which tells us how to keep the records of financial transactions. The need for recording such transactions arises because it is difficult to remember all financial transactions during a period of time. There are two system of recording such financial transactions:                a)single entry book keeping system