QS Study

Advantages of Approaches to Recording in Accounting Transaction

The advantages of this system are as follows:

Scientific system: This is the merely systematic method of recording business transactions. It helps to attain the objectives of accounting.

The complete record of transactions: This method sustains an entire record of all business transactions.

A check on the correctness of accounts: By the employ of this method the correctness of the accounting work can be established by the preparation of trial balance.

Ascertainment of profit or loss: The profit earned or loss occurred throughout a period can be ascertained by the preparation of profit and loss account.

Awareness of the financial situation: The financial situation of the apprehension can be ascertained at the end of every stage through the preparation of balance sheet.

Proportional study: The results of one year may be compared with those of earlier years and the reasons for modify may be ascertained.

Helps in assessment making: The management may be competent to get enough information for its work, particularly for making decisions. Weaknesses can be detected and corrective actions may be applied.

Detection of fraud: The methodical and systematic recording of business transactions on the source of this method reduces the probability of fraud.