Explain the main objectives to double accounting system
Answers
Objectives of Double Entry System of Book-Keeping
The following are the main objectives of double entry system of book-keeping:
1. To keep complete record of every financial transactions systematically and scientifically.
2. To ascertain profit or loss of business organization.
3. To provide the real picture about the financial position of organization.
4. To provide appropriate data for comparison
5. To facilitate the rational decision making by providing appropriate financial data at appropriate time.
6. To provide the financial information of the business.
7. To check the arithmetically accuracy of recording financial transaction.
Theory given below
Explanation:
Under double entry system transaction are recorded atleast two aspects that is credit and debit for example if building purchase in cash then dual aspects of this transaction we can seen first is we record debit side of building account and credit side of cash account. we can clearly understand two effect or dual aspect of double entry system
Objectives of double entry system
1. To maintain systematic records for example we need a data for the year 2018 - 2019 , then we can get the entire knowledge of company or firm.
2.To ascertain profit or loss. we put capital to earn income in the business and at the of year what we got, profit or loss by seeing the number of profit or number of loss. we prepare Income statement for this purpose
3. To depict financial position means calculate assets & Liability of the company and find the position of a company or form on a particular date
for this purpose we make a sheet called balance sheet
4. To provide information to various interested parties like banker, owner, employees , creditor
5. To assist management like decision making, budgeting, forecasting
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