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Question

Write any three advantages of Accounting.


Solution

Advantages of accounting:

(1) Provides Complete and Scientific Record: Accounting is meant to maintain the Complete record of financial transactions during the accounting period of an entity. As such the limitation of human memory is no handicap because of an accounting system.

(2) Information Regarding Performance and Position Accounting cycle after recording moves on to prepare final accounts which reveal how much profit has been earned or loss suffered during the period? Under this system balance sheet is also prepared which tells the financial position of a business on that date.

(3) Enables Comparison of Costs: Expenses, sales, and profit etc., of the business related to the current year, are compared with previous years and also with other units of the same trade/industry.

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