What are advantages of bookkeeping?

The following are the main advantages of book-keeping:

1. Increase in memory power: Human memory has some limitations. In the present set-up, it is not possible to remember all the business transactions.

2. Information regarding performance and position: The final accounts reveal how much profit has been gained or loss suffered during the period.

3. Comparison: The books of accounts maintained correctly and in a proper manner help a lot in making a comparison of the current year's profit.

4. Helpful in lax assessment: Properly prepared accounts help a businessman in dealing with various tax regulating authorities like sales tax, central excise, income tax. etc.

5. Proof in the court: Properly prepared books of accounts can be produced as a proof of matters. This proof is admitted by the courts as evidence in legal matters.

6. Business valuation: If the business is to be sold off then the values of different assets help in the determination of proper price for the business which is to be charged from the purchaser.

7. Errors and frauds: Proper accounting system not only checks errors and frauds, but also minimizes them.