Advantages of Book-keeping
From the above objectives of book-keeping, the following advantages can be noted
Cost-Effective: It is further cost-effective when hiring a bookkeeping overhaul than hiring a casual or part-time staff to do your bookkeeping.
Permanent and Reliable Record: Book-keeping provides a permanent record for all business transactions, replacing the memory which fails to remember everything.
Time Effective: Bookkeeping services have the expertise and know how to look and evaluation your accounts. The bookkeeper should be further flexible and should plan meetings around the business owner’s busy work schedule and also produce reports and figures
Net Result of Business Operations: The result (Profit or Loss) of business can be correctly calculated.
Ascertainment of Financial Position: It is not sufficient to identify the profit or loss; the proprietor should have a full image of his financial situation in business. Once the full picture (say for a year) is known, this helps him to plan for the next year’s business.
Calculation of Dues: For assured transactions payments may be made later. Therefore, the businessman has to know how much he has to pay others.
Control over Assets: In the course of business, the proprietor acquires various assets like building, machines, furnitures, etc. He has to maintain a check over them and find out their values year after year.
Control over Borrowings: Many businessmen borrow from banks and other sources. These loans are repayable. Just as he must have a control over assets, he should have control over liabilities.
Fixing the Selling Price: In fixing the selling price, the businessmen have to consider many aspects of accounting information such as the cost of production, cost of purchases and other expenses. Accounting information is necessary for formative selling prices.
Taxation: Businessmen give sales tax, income tax, etc. The tax authorities require them to submit their accounts. For this reason, they have to preserve a record of all their business transactions.
Legal Requirements: Claims against and for the firm in relation to outsiders can be confirmed and established by producing the records as proof in the court.