Main advantages or benefits of bookkeeping can be described as follows:
1. Keeping Systematic Records
Bookkeeping helps to identify financial transactions of the business and keep permanent records of those transactions systematically and scientifically for future purpose.
2. Providing Financial Information
Bookkeeping assists the management by providing relevant financial information which are essential for framing future plans and policies of the firm.
3. Ascertaining Profit And Loss
Financial data and transaction details are needed to find out profit or loss of the company. Bookkeeping helps in ascertaining profit or loss by providing accurate and complete records of financial transaction.
With the help of financial information and data provided by bookkeeping, financial position of the business can be known easily.
5. Helpful In Decision Making
Bookkeeping helps the management to make financial decisions with the help of accurate and clear financial data provided by bookkeeping.
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6. Determining Tax Liabilities
Bookkeeping is helpful in determining tax liabilities (income tax, value added tax etc.) because it provides essential transaction details and financial information.
7. Detection And Prevention Of Errors And Frauds
Systematically and scientifically updated bookkeeping records helps to detect errors and frauds easily and also help to solve them as soon as possible. It helps to minimize the business risk by maintaining financial discipline.
