Advantages And Disadvantages Of Test Check

Accounting , Business
Merits Or Advantages Of Test Check

The main advantages of test check can be highlighted as follows:

1. Reduce Work Load

It is a checking of partial records from books of accounts. It examines only certain financial transactions because it is difficult to check all financial transactions included in the books of accounts. So, it reduces work load and task of auditing can be performed quickly.

2. Saving Of Time And Labor

Checking of large volume of transactions takes more time and energy. In test checking, only selected transactions are examined which saves time and labor.

3. Cost Saving

Test check reduces the work load, time and energy. It means audit task can be completed in less time with less effort. So, it lowers the cost of audit.

4. Suitable For Big Firms

It is suitable for big business houses with large volume of financial transactions because it is very difficult to test each and every transactions.

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5. Accuracy And Reliability

Sample transactions are selected very carefully and intelligently with special attention. So, it ensures accuracy and reliability of checking of records.

Demerits Or Disadvantages Of Test Check

The main disadvantages of test check can be highlighted as follows:

1. Chance Of Errors

In test checking, financial transactions are examined on random basis. So, there exists a high chance of frauds and errors undetected in the books of accounts.
advantages and disadvantages of test check
2. Not Suitable For Small Companies

Test check is not suitable for small business firms with less numbers of financial transactions.

3. Internal Check And Internal Control

If there is no strict internal check and internal control system in the organization, it is not possible to conduct internal check because it may report false data.

4. Doubtful And Suspicious

Audit report is prepared on the basis of few sample transactions examined by internal check. So, it is always doubtful and suspicious for auditor.

Pros And Cons Of Test Checking In Short

Pros:
- It minimizes time, effort and cost of audit
- It is suitable for big business firms having large volume of financial transactions of similar types
- It reduces the workload of both accounting staff of the company and the auditor

Cons:
- It is not applicable for small business firms having less volume of transactions
-  Auditor may fail to detect errors, frauds and loopholes because he/she does not examine all transactions
- Test check cannot be conducted if there is no proper internal check system in the company
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Advantages And Disadvantages Of Routine Checking

Accounting , Business
Benefits Or Advantages Of Routine Checking

The main advantages of routing checking can be described as follows:

1. Detection Of Errors

Routine checking involves the examination of debit and credit totals, ledger postings and account balances. Books of accounts are carefully checked so that errors and frauds can be easily located.

2. Arithmetical Accuracy

As we know that it discovers errors and frauds in the books of accounts, it helps to correct mistakes quickly and maintain records up-to-date. So, routine checking ensures arithmetical accuracy of financial records.

3. Basis For Final Audit

All the records and books of accounts are already examined which saves time and labor of auditor while conducting final audit. So, it is a basis for final audit.

4. Simple And Easy

It is a very simple task that can be carried out by a staff having the knowledge of simple accounting rules. So, it is very easy to conduct routine checking job.

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5. Internal Control

Routine checking is a regular process that shows recording of transactions and operational efficiency of the firm. So, it helps the management for internal control.

Drawbacks Or Disadvantages Of Routine Checking

The main disadvantages of routine checking can be described as follows:

1. Planned Errors

It discovers only some small and unplanned errors occurred in the books of accounts. Planned errors and frauds cannot be disclosed by routine checking. It is very difficult to locate errors of principle and compensating errors by conducting routine checking. 

2. Not Useful For All Business

It is not useful for those firms which apply self-balancing system. Routine checking is not appropriate for small firms with limited number of transactions.

3. Not Reliable

It is carried out by junior staff. There is a chance of carelessness at work. So, its result may not be reliable.

4. Monotonous

It is time consuming and monotonous process. Accounting staff may get bored and lose interest in his/her job.
advantages disadvantages routine checking
Pros And Cons Of Routine Checking In Short

Pros:
- It ensures arithmetical accuracy of records in original entries
- It helps to discover errors and frauds in the books of account
- It is helpful for conducting final audit
- It requires less cost, time and effort to conduct routine checking

Cons:
- It cannot discover planned errors and frauds
- It is boring and monotonous process
- It is not suitable for small business firms having limited volume of financial activities
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Advantages And Disadvantages Of Monopoly

Business , General
Benefits Or Advantages Of Monopoly

The main advantages of monopoly can be described as follows:

1. Supernormal Profit

In monopoly, there is only one supplier for the entire market. Company can set selling price of goods freely as per wish. Therefore, monopolies can make supernormal profit.

2. Economies Of Large Scale

Only one company sells products to the large number of customers. Because of large volume of production and less cost of production firm enjoys the benefit of economies of large scale.

3. Government Revenue

Companies earns massive amount of profit because of monopoly. So, government can collect more tax from them. So, monopolies are good source of government revenue.

4. Price Discrimination

Price discrimination is another benefit of monopoly. Company may use this policy to benefit economically backward customers. For example, electricity authority may provide discount to poor families.

5. Research And Development

Company makes massive profit because of lack of competition in the market. So, it can invest huge amount of money for research and development activities. It helps to improve product quality and also minimizes the cost of production.

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6. Promotes Innovation

Because of huge investment in research and development, monopoly promotes innovation also.

7. Face Depression

Because of being single supplier of goods and services, economic crisis like depression does not affect monopolies or company can face depression easily.

Drawbacks Or Disadvantages Of Monopoly

The main disadvantages of monopoly can be described as follows:

1. Customer Exploitation

Single seller has absolute power of setting price and supplying goods in the whole market. It may sell low quality products at higher price. So, there exists a chance of exploitation of customers in monopoly market.

2. Poor Service

Being a single trader, company may focus only on earning more profit rather than providing good service to the customers. Because of no customer sovereignty, consumers may not get quality products and proper service.

3. No Choice

Customers have no choice because there is only one supplier for whole market.

4. Higher Price

Monopoly lacks competition because there is one supplier for all customers. So, company may charge higher price for low quality products. 

5. Unfair Practice

Monopoly restricts others to enter the market. New firms cannot sell their products in this market structure. So, it is an unfair trade practice.
advantages disadvantages of monopoly
Pros And Cons Of Monopoly In Short

Pros:

- Business Firms can earn massive profit
- Companies enjoy economies of scale because of large volume of production
- Requires less marketing and promotion costs
- It encourages innovation, research and development
- Government can collect more tax from monopoly firms

Cons:

- Customers have to pay higher price for inferior products due to the lack of competition
- It lacks customer sovereignty
- Because of single supplier, there is no alternatives for customers
- It may increase customer dissatisfaction
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Advantages And Disadvantages Of Monopolistic Competition

Business , General
Benefits Or Advantages Of Monopolistic Competition

The main advantages of monopolistic competition can be described as follows:

1. Easy To Enter And Exit

The main benefit of monopolistic competition market structure is that new firm can enter the market without any barriers. Traders can exit or leave the market at any time without any restrictions and obstacles.

2. Product Differentiation

In this type of market, products are differentiated or varieties of products are available. So, it provides selection facility for buyers.

3. Advertising

In monopolistic market, products are identical or homogeneous like in perfect competition. So, firms advertise their products through different media which helps to provide information about quality, price and using methods to the customers.

4. More Profit

Companies are free to set price of their products. So, they can set higher price of goods and services which generates more profit.
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5. Better Quality

Because of the ability to fix price and chance of more revenue, companies try to improve product quality. It helps to retain existing customers and attract potential customers.

6. Innovation

Monopolistic competition encourages innovation. Companies regularly perform research and development activities to add new features to their products which helps to increase quality and value.

Drawbacks Or Disadvantages Of Monopolistic Competition

The main disadvantages of monopolistic competition can be described as follows:

1. Higher Price

In this type of market, product price is higher than perfect competition because of the following reasons:
* Firm can set price itself
* Firm invests huge amount of money in advertisement and other promotional activities
* Wastage of resources such as excess packaging, marketing etc. 

So, customers have to pay more money in monopolistic market.

2. Misleading Customers

Various promotional activities are conducted to provide information about the products and services. Sometimes wrong information can mislead the customers.
advantages disadvantages monopolistic competition
3. No Economies Of Scale

Because of larger number of traders, all companies cannot enjoy the benefit of economies of scale.

Pros And Cons Of Monopolistic Competition In Short

Pros:

- Customers get selection facility because of different alternatives
- Companies can easily enter or exit the market because of less barriers
- Customers get detail information about the products or services
- It promotes innovation
- Because of competition customer get quality products at lower price

Cons:

- Price of the product may become high because of high marketing budget
- There is no economies of scale
- False information about products may mislead customers
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Advantages And Disadvantages Of Perfect Competition

Business , General
Merits Or Advantages Of Perfect Competition

The main benefits or advantages of perfect competition can be described as follows:

1. Easy Entry And Exit

In perfect competition, business firms or traders can enter the market and start business without any restrictions. They can exit or leave the market at any time without any obstacles. So, there is no entry and exit barriers in this type of market structure.

2. Lower Price

In this type of market, price of product or service is fixed by demand and supply mechanism. If any trader charges higher price then customers are free to buy products from another shop. So, consumers can fulfill their requirements at lower price.

3. No Consumer Exploitation

Due to competition, customers can get standardized products at affordable price because sellers cannot influence the market. Therefore, perfect competition discourages consumer exploitation.

4. Less Promotional Cost

As we know that this market structure deals with homogeneous products and price is fixed by the market mechanism, producers do not need to invest huge amount in advertisement, publicity and other promotional activities.

5. Optimum Utilization Of Resources

Because of lower price, firms earn less profit. Therefore they try to increase efficiency and minimize wastage by utilizing resources properly which helps to lower the cost of production.

Demerits Or Disadvantages Of Perfect Competition

The main drawbacks or disadvantages of perfect competition can be described as follows:

1. Less Profit

It is very difficult for small traders to sustain in the market because of the lack of incentive and lower profit margin.

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2. Limited Choice

This market deals with identical or homogeneous products and services. Therefore there is a limited choice for customers. Because of the lack of variety, customers have no selection facility.

3. No Economies Of Scale

There are various firms trading similar types of products. So, business firms cannot enjoy the benefit of economies of large scale. 
advantages disadvantages of perfect competition
Pros And Cons Of Perfect Competition In Short

pros:
- It discourages customer exploitation
- It creates active business environment
- There are no restrictions to enter or exit the market
- Customers get high quality products at reasonable price
- Producers focus on maximum utilization of resources to improve efficiency
- It requires less advertising and publicity budget

cons:
- It is difficult for small traders to sustain because of high competition
- It lacks product differentiation
- Firms cannot enjoy the benefit of economies of scale
- In this market, profit margin is very low. So producers cannot make sufficient investment for research and development purpose.
- Customers get limited choice
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Advantages Of Marketing

Business , Marketing
Roles, importance or advantages of marketing can be described from customer's, business firm's and society's point of view as follows:

Benefits Of Marketing To Customers

The main advantages of marketing to customers can be studied as follows:

1. Need Satisfaction

As we know that the main objective of marketing is to satisfy customers by producing and supplying goods and services as per their needs or wants. So, marketing is important to fulfill needs and to provide satisfaction to the customers.

2. Providing Information

Marketing uses different methods and techniques such as advertising, sales promotion, publicity etc. to inform potential customers about the quality, taste, price, using methods and uses of products and services. So, it helps to provide information to the customer before buying goods.

3. Selection Facility

In market, we can find similar types of products produced by different firms. Marketing helps to identify the brand and select products according to their needs and interest. 

4. Improve Lifestyle

Marketing promotes better lifestyle by providing quality goods and services at affordable price. So, it helps to improve the living standard of the people.
 
Benefits Of Marketing To Business Organizations

Marketing is important or advantageous for business firms because of the following reasons:

1. Increase Production

Business firms uses different marketing techniques (advertising, sales promotion, public relation etc.) to enlarge the market. It helps to find new market and new demand for their products. So, marketing helps to increase production.

2. Revenue Generation

In any business company, there are different departments or functional areas such as production department, human resource department, accounting department, administrative department and marketing department. Among these departments only marketing generates revenue for the company. So, marketing activities are important to earn profit for the firm.

3. Planning And Decision Making

Marketing provides useful data and information about market, customers behavior, competitors, government policy etc. to the management. So, it helps the manager in planning and decision making process.

4. Increase Goodwill And Image

Marketing always tries to satisfy customers by providing goods and services according to their needs and wants at lower price. Satisfied customers become loyal to the company which helps to improve goodwill and image of business firm.
advantages of marketing
Benefits Of Marketing To The Society

Advantages of marketing to the society or nation can be explained as follows:

1. Economic Development

Marketing promotes productivity and efficiency which leads to maximum utilization of resources (natural resources, physical resources, finance resources etc.) in the country. Proper utilization of resources, better productivity and efficiency help to increase national income which helps in the economic development of the nation.

2. Employment Opportunities

Marketing promotes industrialization in the country. It generates employment opportunities in different ares such as research and development, production, promotion, distribution etc. So, it is very important to create employment opportunities in the country.

3. Rise In Standard Of Living

Marketing provides better quality products at lower price to the customers which helps to improve their lifestyle. It provides employment opportunities and helps to break vicious poverty circle in the society. So, it raises the living standard of the people.

4. Utility Creation

Marketing creates time utility (storage), form utility (product development), place utility (transportation), and possession utility (exchange) of products or services.
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