Major benefits or advantages of accounting can be described as follows:
1. Systematic Recording Of Transaction
Accounting maintains systematic and complete record of day to day financial transactions of the business of certain period.
2. Knowledge Of Profitability
Accounting helps to ascertain or obtain profit or loss of the company by preparing income statement and profit and loss account with the help of financial data of certain period.
3. Information About Financial Position
Accounting assists management, creditors, shareholders, government and employees by presenting the actual financial position of the company by preparing balance sheet at the end of the accounting period.
Scientific and systematic accounting system helps to detect errors and frauds. It helps the management to take appropriate step to solve those errors and misappropriation of cash.
5. Helpful In Decision Making
Systematic accounting record assists the management in planning and controlling function. It also helps in taking decisions regarding price determination, cost reduction, business expansion etc.
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6. Evidence In Court
Accounting records and data can be presented in the court as evidence in the event of dispute.
7. Determining Tax Liabilities
Proper accounting is important to determine tax liabilities such as income tax, value added tax, sales tax etc. Correct financial data is needed for tax determination purpose.
