Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
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Importance of double entry accounting system for public limited company (basic account)
1. Presented by
Rishi Ram Khanal
Bim 3rd (TU)
Importance of double entry
accounting system for public
limited company
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2. CONTENT
ο Introduction
ο Uses of double entry system.
ο Advantages of double entry accounting system for
public limited company.
ο Disadvantages of double entry accounting system
for public limited company.
ο conclusion
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3. Introduction
ο Scientific, systematic and complete recording
system of every financial transactions
ο Recognizes the fact that every transactions has
two equal and offsetting account.
ο The change in one account called a debit and
the change in another account called a credit.
ο Helps to know the financial position and
operating result of an organization.
ο Company whose securities are traded on a stock
exchange and can be bought and sold by anyone
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4. Uses of double entry system.
ο Recordings of information in chronological order
ο Analyze the transactions
ο Summarize the information
ο Preparations of different financial statements like
trading. Profit & loss account, Balance Sheet
ο Which helps in determining financial position and
operating result.
ο Communicating the result to concern authority.
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5. Advantages of double entry
accounting system for public limited
company.
ο Complete records of every transactions
ο Reliable information at a glance
ο Knowledge of gross and net profit or net loss
ο Cost control
ο Detection of frauds and errors
ο Presents the financial position
ο Helps in comparative studies
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6. Disadvantages of double entry
accounting system for public limited
company.
ο Error of complete omission
ο Error of principle
ο Compensating error
ο Chances of window dressing
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7. CONCLUSION
ο Double entry system in not only useful in
public limited company it is very beneficial in
every organization for the complete record of
each and every transaction.
ο Act as a proof in court if necessary
ο Helps to know the financial position
ο Guideline to utilize the resources of
organization.
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