Advantages of Accounting
The following are the advantages of accounting:
(i) Maintenance of Business Records: All financial transactions are recorded in a systematic manner in the books of accounts so that there is no need to depend upon on memory. It is impossible to remember the business transactions which have grown in size and complexity.
(ii) Preparation of Financial Statements: Proper recording of transactions facilitates the preparation of financial statements i.e. the trading and profit and loss account and balance sheet.
(iii) Comparison of Results: Accounting information when properly recorded can be used to compare the results of one year with those of earlier years so that the significant changes can be analyzed.
(iv) Decision Making: Accounting information helps the management to plan its future activities by preparing budgets and coordination of various activities in different departments.
(v) Evidence in Legal Matters: Properly recorded accounting information can be produced as evidence in a court of law.
(vi) Provides Information to Interested Parties: Interested parties like owners, creditors, management, employees, customers, government, etc. can get financial information about the organisation.
(vii) Helps in Taxation Matters: Income tax and/sales tax authorities depend for taxation matter on the accounts maintained by the business.
(viii) Valuation of Business: When the business is to be sold, the accounting information can be utilized to determine the proper value of business.
(ix) Replacement of memory: No need to remember transaction as it is recorded.