Explain Advantages And Disadvantages Of Double Entry System

| September 1, 2014 | 0 Comments

What are the Advantages and Disadvantages of Double Entry System? Explain in detail the main Merits and Demerits of Double Entry System?

Definition Of Double Entry System Picture

 

Advantages:

Double entry system is acknowledged as the best method of accounting in the modern world. The following advantages are derived from it.

1. Under this system both the aspects of each and every transaction are recorded. So, it is possible to keep complete account.

2.

Double Entry System

3.

Double Entry System Explanation

4. A Balance Sheet can be prepared by taking together all the accounts relating to assets and liabilities and thereby the financial position of the business can be assessed.

5. Under this system mistakes and defalcations can be detected – this exerts a moral pressure on the Accountant and his staff.

6. Under this system necessary statistics are easily available so that the management can take appropriate decision and run the business efficiently.

7. All the necessary detail about a transaction can be obtained quickly and easily.

8.

Double Entry System Notes

9.

Double Entry System Points

Disadvantages:

1. In this system every entry is recorded in accounts in two stages one Journal, two  Ledger and on two sides Debit side and the Credit side. This result in maximize in the numbers and size of the books of accounts and made various complications.

2. It involves time, labour and money. So it is not possible for small concerns to keep accounts under this system.

3. It requires expert knowledge to keep accounts under this system.

4. As the system is complex, there is great is greater possibility of committing errors and mistakes.

It is clear from above discussion that the advantages of Double Entry System far outweigh its disadvantages. So, it is regarded as the best system in the modern world.

 

 

About the Author:

×

Post a Comment