What are the Advantage of Accounting and Bookeeping ?

Advantage of Accounting

Some Common advantage of accounting are discussed below :

• Consolidation of Business Work : It systematically records all financial transaction related to the respective year in the account books.Because of their size and complexity, it is not possible to remember each and every transaction for a long time.

• Financial Statements Preparation :  Financial reports such as Trading and report for gain and loss, Balance Sheet can be easily done if transactions are properly recorded. For the preparation of the entity's financial statements, proper recording of all financial transactions is very important. It easily facilitates the comparison of year – to-year financial results. The management may also analyse the systematic recording of all financial transactions in accordance with the entity's policies.

• Decision Making : Decision-making is easier for management if the financial transactions are properly recorded. Accounting data allows managers in different departments to schedule their future plans, make estimates and organise different activities. It facilitates the organisation's financial information for stakeholders such as owners, creditors, employees, customers, government, etc.

• Helps in Taxation Matters : Different tax authorities, such as income tax, indirect taxes, are dependent on the accounts managed to settle tax issues.

• Assessment of Company : It can be used to properly evaluate the company accounting data of an organisation. Therefore, in the case of the entity's sale, this helps determine the entity's value by using the accounting details.

• Replacement of Memory : Proper recording of accounting transactions replaces the need to remember transactions.

Advantage of Bookkeeping

• Detailed Recording : A committed, diligent bookkeeper will always keep up-to-date detailed records. Not only will this full document assist you with managing your business accounts, it will also be of great help once you need your financial statements — or when the company is audited — as this procedure will be much quicker and much cheaper.

• Always in accordance with the law : A competent bookkeeper will always comply with the new legislation to ensure that all the records and documents are up-to-date with any recent legal changes.  Because the bookkeeper holds himself or herself accountable for any work that they do, you can rely on them to clear any mistakes. This saves time and effort for the bookkeeper, which in turn saves money for the company.

• Easier to Plan : It is much easier to plan and predict the future once you have a detailed recording and a better overview of the company's accounts. If you are secure in your data, you can solve problems easily and you can take any opportunities that occur without having to worry about miscalculations in the data available.. Due to the balance sheet summary of profit and loss trends, you'll be able to know exactly what you need to do and how long you need to do it.

• Immediate Reporting : Although you will have to wait for the accountant or the auditor to file their statements to complete the official accounts, you will always have an updated balance sheet to inquire about the current state of the accounts.You will be able to present these information to any interested party, providing additional confidence both in your work as a director and in the overall health of the company.

• Enhanced Bank and Investor Relations  : Such confidence would definitely improve the business relationships with investors and shareholders. In turn, banks will be more likely to provide you with more competitive loans once they see how prosperous your business is. Any time an investor is interested in the health of your company, you can just show the current detailed sheets and prove that the company is making major success. 

• Better Tax Prediction : While the IRS would request an official financial statement from your business for tax purposes, if you have access to comprehensive balance sheets over time, you will be able to predict the outcome more accurately. With them, you can keep an eye out for trends in your company's business and be more confident in the amount of taxes you will be expected to pay at the end of the fiscal year.

• Faster Business Response Time : If you have real-time information about the state of your accounts, you can react quickly to any changes that occur on the market or on your business.

• Faster Financial Analysis : Since bookkeeping appears to be less costly than accounting, it is helpful to know that you will shorten the time spent by an accountant reviewing your accounts and making financial statements by maintaining detailed records.This will not only diminish the cost of accounting, but will also give you more time to act upon the information provided by the analysis and change any strategies you might have planned.

• Easier Audits : Producing financial statements is much easier and faster when you have a better data-recording model. You will have a much easier time conducting an audit than you would if your accounts are messy, disorganised or even slightly outdated. Any auditor you employ will just need to access the detailed balance sheets and compare them with the statements to know exactly what was done. They can produce their report quickly and any mistakes will float to the surface.