Livestock Economics, Marketing and Business Management

ADVANTAGES OF DOUBLE ENTRY SYSTEM

• Complete record of transactions: Double entry system records both aspects of a transaction. Thus, a complete and reliable record of all business transactions is provided.
• Arithmetical accuracy: As both debit and credit aspects of a transaction are recorded, a trial balance can be prepared and arithmetical accuracy can be easily verified.
• Ascertainment of financial result: Profit and loss account can be prepared to find out profit earned or loss suffered during a given period.
• Ascertainment of financial position: Balance sheet of business can be prepared to ascertain financial position on a particular date, i.e., amount of assets, liabilities and capital.
• Helps in comparison: Double entry system enables businessmen to ascertain purchases, sale, expenditure, income, assets, liabilities of the current year as well as those of previous years to make simple comparison which helps management to take appropriate decisions.
• Detection of frauds if any: Double entry system is a scientific and reliable system. It prevents commission of frauds, but if it has been committed, it can be easily detected.