However, the advantages of Accounting in business enterprise are stated below; In a business organization, a huge number of transactions occur. As a conclusion, accounting information system brings a lot of disadvantages to the organization in today’s business environment, but accounting information system combines the study and practice of the accounting with the concept of designing, implementing, controlling and monitoring the information systems. My Absolute Worst, Life-Ruining Financial Mistakes, 5 Things To Buy Right Now Which Will Save You Money, From $10,000 In Credit Card Debt to Retired in 5 Years. The main advantages of an accounting information system are the increased speed of processing the numbers, efficient organization, and classification and safety of inputted data. Careful analysis of regular financial statements will keep a company operating efficiently and help it stay ahead of potential problems. But if you only run the numbers when it comes time to pay your bills, you could get caught short of cash and have trouble making the required deposits or payments. It is important to maintain an accurate record of sales through invoicing and accounts receivable as well as wage payments made to employees. In turn, that information can be analyzed and used to make strategic decisions concerning company growth. The necessity of Accounting was deeply felt for keeping accounts of business concerns with the development of the corporate business. Once appropriately recorded, this information can now be tracked and used by managers within your company. She holds a Bachelor of Arts degree in journalism from Temple University. Below are some of the main advantages of Accounting: Decision Making Helps on taxation matters Replacement of memory Comparison of results Maintenance of business records Valuation of business Preparation of financial statements Her work has appeared in the business sections of bizfluent, azcentral and Happenings Media. debtors, creditors, investors, owners, employees etc. Among the basic benefits of accounting is that financial records are organized in one place and systematized. There are however both advantages and disadvantages of accounting as an information system. Arithmetical accuracy of accounts is also tested by preparing trial balance. Nowadays, in all types of organizations and individual life accounts are kept for the required information. Business owners and company managers will praise the merits of an accounting department that supplies them with up to date financial information. And timely steps are possible, if necessary, like rectifying the errors in accounts. If there appears to be extremely high costs within a particular quarter, you will need to scrutinize the numbers. While accounting practices are essential for running a company, they are also useful for outside entities to evaluate the financial performance and value of a company. If you are trying to gather investors to back your company, you will need financial documents that indicate the overall financial health of your company. She has done public relations work for several nonprofit organizations and currently creates content for clients of her suburban Philadelphia communications and IT solutions company. Accounting records all transactions of VAT systematically and helps to determine VAT. Computerized financial information systems are faster and more efficient in processing … total capital, total payable, total receivable, total assets, and cash in hand and a bank can be known by preparing a balance sheet at a particular date. All your company's financial information is recorded and placed into categories which can be easily accessed, summarized and evaluated. At the end of a particular accounting period, profit and loss of a business concern can be ascertained by preparing an income statement. A businessman at any time can easily collect information from these accounts. A businessman is to acquire various types of property and assets to run the business profitably and thereby he is to face a lot of liabilities. Some data can also be recorded or interpreted differently depending on who is inputting the information into the books. It is not possible for anybody to keep it in mind for long. Regular deposits for earned income tax, filing of quarterly income statements and payment of sales tax to state taxing authorities are all a necessary part of doing business. Bookkeepers need to be careful to expense items carefully and avoid operator error, or figures could be improperly recorded. The loan giver sanctions loan on the basis of accounting information. In cash book, all cash receipts and cash payment are recorded. For any reason, the question of selling the whole business or a. part may arise in course of time. Among the basic benefits of accounting is that financial records are organized in one place and systematized. Accounts kept properly can be presented before the court as documentary evidence. Current year’s profit-loss and property-liabilities can’ be compared with previous year’s matters of similar nature if accounts are kept systematically and accurately. Day-to-day cash receipts, payments and cash in hand and cash at bank can be known from cash book. Elisabeth Natter is a business owner and professional writer. Planning regarding income and expenditure becomes easier through proper and accurate accounts keeping. A record of each sale is recorded in an invoice, payments are recorded as revenue, payroll and sales tax is set aside in a liabilities account and operating costs are expensed to the appropriate departments. Prevention and detection of fraud and forgery are possible by keeping accounts systematically. The necessity of Accounting was deeply felt for keeping accounts of business concerns with the development of the corporate business. Is their investment well placed and will they get their money returned to them? Another one of the advantages of accounting standards is that they will save you headaches when it comes to quarterly reporting and paying of taxes. The systematic keeping of accounts in accepted principles helps to present reliable income tax statements based on which income tax is determined. This helps the businessman in formulating rules and taking decisions. This contrasts the manual evaluation of information, which involves writing out the data by hand and doing time consuming calculations. Did the amount of money spent on last month's advertising blast seem to pay for itself in increased revenue? Financial summaries can reveal areas of strength and weakness. In this situation, an accurate selling price can be determined on the basis of properly kept accounts. For example, does extra time need to be spent tracking down delinquent customer payments to bring in more cash? In both cases of winding up and insolvency, authorities concerned can determine the value of various assets and liabilities properly from the books of accounts maintained systematically and accurately.
2020 advantages of accounting information