Advantages of Double-Entry Bookkeeping
Some important advantages derived by a firm from the use of double-entry bookkeeping are:
● It helps to keep a complete record of business transactions.
● It enables one to keep a check on the calculation accuracy of the books of accounts based on matching the debits and credits. This also lowers the chances of errors significantly.
● It reveals the financial position of a business at a point in time.
● It makes it possible to compare the current year with those of previous years, enabling the owner to manage the business effectively.
● It enables us to ascertain the details of any account easily and accurately.
● It helps in determining the cost of production by preparing a manufacturing account in the case of a manufacturing business.
● It is useful in calculating the abnormal loss due to various external factors such as accidents, fires, and so on. This benefits in filing claims with the insurance company.