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.
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.
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