Advantages of Book-Keeping

Advantages of Book-Keeping :

Book-Keeping has many advantages. The main advantages of Book-Keeping are :

1. When a business concern maintains a complete record of business transactions, it has complete information about its expenses and losses, and incomes and gains. So, it can easily ascertain it's net profit or net loss for any year.

2. When a business house keeps book-keeping records, it has a complete record of what it owns (i.e., it's assets), what it owes (i.e. it's liabilities) and what it has invested (ii.e., it's capital). So it can know the true and correct financial position of its business at any time.

3. When a business concern has records of the transactions of its business for every year, it can compare the results of its business from year to year,  and ascertain the progress of its business.

4. With the help of book-keeping records, a business concern can prepare wise plans for the future.

5. Book-Keeping records enable a business concern to keep a good control over various activities and properties. It is for this reason that book-keeping records are called the eyes of a business.

6. Book-Keeping records enable a business concern to detect errors and frauds that have taken place in its business and take steps to prevent their recurrence (i.e occurring again).

7. Claims against a business by its creditors, and claims by the business against it's debtors can be easily established and proved in a court of law by producing the book-keeping records as evidence.

8. A business concern is required to maintain necessary records in connection with sales tax, income-tax, etc. and pay the required taxes to the Government. The tax requirements can be satisfied and the tax liability can be calculated easily with the help of book-keeping records.