Advantages of Accounting

Advantages of Accounting

Advantages of accounting include tracking of receivables, profit calculation, controlling the business, information tracking, and mistake & fraud identification. These advantages of accounting have been explained below;

1.    Tracking Receivable

First advantage of accounting is tracking the receivable & payable amount from the customers and employees. In modern business world, almost every business is making credit sales and credit purchases to. Therefore a proper tracking of amount receivable & payable is must and this requirement is met by accounting.

2.    Profit Calculation

Second advantage of accounting is profit calculation of business. Accounting facilitates the profit calculation at any point of time. The core or primary objective of every business is profit maximization and accounting provides information about achievement of this objective.

3.    Controlling Tool

Third advantage of accounting is its role in controlling of business. Accounting provides details break of different costs and this information can be used to control the costs.

4.    Information Tracking

Fourth advantage of accounting is quick tracking of information. Any recorded transaction and relevant documents can be easily tracked from the accounting record as every transaction is recorded by a unique voucher number.

5.    Mistake & Fraud Identification

Fifth advantage of accounting is identification of fraud & mistake. Information generated from the accounting system i.e. trial balance, profit & loss, and customer balances, supplier balances, cash balances helps management in judging the fraud or mistakes.

6.    Performance Evaluation

Sixth advantage of accounting is performance evaluation. With the help of segment reporting, results or performance of different segments can be measured.