Advantage of accounting

i) Assistance to management: The accounting information helps the management to plan its future activities by preparing budgets in respect of sales, production, expenses, cash, etc. Accounting helps in coordination of various activities in different departments by providing financial details of each department. The managerial control is achieved by analyzing in money terms the departures from the planned activities and by taking corrective measures to improve the situation in future.

(ii) Records rather than memory: It is not possible at all to do any, business by just remembering the business transactions which have grown in sizeand complexity. Transactions, therefore,must be recorded early in the books of accounts so that necessary information about them is available in time and free from bias.

(iii) Intra-period .comparisons: Accounting information when recorded properly can be used to compare the results of one year with those of previous year(s).

(iv) Aid in legal matters: Systematically recorded accounting information can be produced as an evidence in a court of law.

(v) Help in taxation matters: Income Tax and Sales Tax authorities could be convinced about the taxable income or actual turnover (sales), as the case may be with the help of written records.

(vi) Sale of a business: In case, a sole trader or a partnership firm or even a company wants to sell its business, the accounting information can be utilized to determine proper purchase price.

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