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:
With the help of double entry system, profit and loss account can be prepared easily which helps to ascertain the results of business operations i.e. profit or loss.

c) Presents the financial position: Double entry system of book keeping helps to prepare balance sheet by providing details of assets and liabilities of business, which helps to present the financial position of the business.

d)Checks arithmetical accuracy: As both the aspects of every transaction are recorded ,it helps to check the arithmetical accuracy by preparing a summery report called trial balance.

e)Facilitates comparison: Under this system, separate recording is made for each year's transactions. Therefore it facilitates comparison of one item of one year with similar item of previous year and helps to know its progress from year to year.

f)Reliability: Under this system, transactions are recorded in a scientific and systematic manner: therefore, it provides an authentic record of all the transactions of a business which is accepted by the court, tax authorities etc. as an authentic documents.