Factors which required methodical accounting
The factors that necessitated methodical accounting are given below,
Transactions are documentated in financial terms- Only those contacts which can be articulated in financial terms are recorded in the books. For example, if a company has a super shop and two transportation vehicles, then their financial values is recorded in the books, i.e. a super shop costing $ 50,000 and two transportation vehicles costing $ 10,000. Thus the total value of assets is $ 60,000.
Only financial dealings are recorded- Those events that are economic in environment are only recorded in the books of accounts. For example, salary of an worker is recorded in the books but his/her educational condition is not recorded.
Categorization of transaction- Business transactions of comparable character are classified and posted under their particular accounts. For example, all the transactions concerning to equipment will be posted in the equipment Account.
Art of recording- Transactions are recorded in the order of their incidence.
Analyzing and interpreting data- Methodical accounting records permit users to investigate and infer the accounting data in a suitable and correct way. These accounting data and information are presented in form of graphs, statements, charts that leads to simple communication and understandability by different users. Moreover, these facilitates in judgment creation and upcoming predictions.
Summarizing of data- All dealing transactions are summarized in the outline of audition Balance, Trading Account, Profit and Loss Account and Balance Sheet that provides required information to various users.