Double entry system of accounting is based on the principle of 'dual aspect'.Explain the features of double entry system of accounting and also give its benefits.
Double entry system of accounting is based on the principle of 'dual aspect'.Explain the features of double entry system of accounting and also give its benefits.
Features of the double entry system are as follows:
(i) It maintains a complete record of each transaction.
(ii) It recognises at least two aspects of every transaction i.e., debit and credit.
(iii) In this system, one aspect is debited and another aspect is credited as per the rules of debit and credit.
(iv) The total of all debits is always equal to the total of all credits.
(v) It also helps in establishing the arithmetical accuracy of accountancy records by preparing the trial balance.
The main advantages of the double entry system are:
(i) Double entry system is a scientific system of recording business transactions. Two sides of a transaction are recorded on the basis of scientific and logical rules due to which there are fewer chances of errors.
(ii) Under the double entry system, both sides of a transaction are recorded, which results in presenting correct income or loss, assets, and liabilities.
(iii)The accuracy of the accounting work can be established by the use of this system, by preparing the trial balance.
(iv) The profit earned or loss suffered during a period can be found out by preparing the profit and loss account.
(v) The financial position of the business can be ascertained at the end of the accounting period by preparing the balance sheet.
Features of the double entry system are as follows:
(i) It maintains a complete record of each transaction.
(ii) It recognises at least two aspects of every transaction i.e., debit and credit.
(iii) In this system, one aspect is debited and another aspect is credited as per the rules of debit and credit.
(iv) The total of all debits is always equal to the total of all credits.
(v) It also helps in establishing the arithmetical accuracy of accountancy records by preparing the trial balance.
The main advantages of the double entry system are:
(i) Double entry system is a scientific system of recording business transactions. Two sides of a transaction are recorded on the basis of scientific and logical rules due to which there are fewer chances of errors.
(ii) Under the double entry system, both sides of a transaction are recorded, which results in presenting correct income or loss, assets, and liabilities.
(iii)The accuracy of the accounting work can be established by the use of this system, by preparing the trial balance.
(iv) The profit earned or loss suffered during a period can be found out by preparing the profit and loss account.
(v) The financial position of the business can be ascertained at the end of the accounting period by preparing the balance sheet.
