Good records shorten the length of time that an audit takes to be completed. F: 780 637 5285 By the time the deadline comes, everything should be in good order ready for filing. Browse more Topics under Theoretical Framework Of Accounting. Well kept records means tax saving. Edmonton, AB, T6W 0N2 E. Identify and explain 5 advantages and disadvantages of accounting recording process The advantages of accounting recording process is 1. Advantages of Using Accounting Software. Guide. You must track and document revenue and expenditures in order to pay appropriate taxes each year. It systematically maintains a proper book ... Prevention and Detection of Fraud. The following are the main advantages of accounting: 1. Both financial and cost accounting information are used in the management accounting system. In conclusion, keeping proper business records can be seen as a daunting task at first. Advantages and disadvantages of accounting software. info@anthonyadeniji.com, Monday - Friday 9:00 am - 5:00 pm Learning an accounting information system can often be difficult and time-consuming. Disadvantages of Accounting. If a business is chosen for audit, the business owner will be asked to produce the necessary backups to the info filed on the income tax return. 2. Few advantages of financial accounting are: Maintain Business Record – Financial accounting records each and every transaction of business organization. This means they only pay what is due, no more or less, as their records remind them of all the expenses they are entitled to claim against their income. It is disadvantageous that your records are only as accurate as your bookkeeper. It does not consider the real value or market value of assets & liabilities. Costs – The benefits of cost accounting come with a price. Present true Financial Position. Some of the advantages of accounting are as follows: 1. Based on Financial and Cost Records. (ii) Cost Effective: This method is less expensive as compared to keeping records as per double entry system. One of the main advantages of keeping good accounting records is to comply with the law. The auditor, will therefore spend less time at the business. Financial accounting also can pose disadvantages to a business by disrupting the timing of its operations. Individuals must be trained on a system, and this can cause a disadvantage to companies in terms of time and manpower. However, such software sometimes comes with its share of problems, so it is important not to overlook the possible disadvantages. Additionally, without the right records, industry standards might be used as a guide in the audit of a business. Additionally, proper analysis of records, can help in making strategic decision of changing business focus. Helps in preparing Financial Statements. Saturday - 10:00 am - 3:00 pm Preparation of financial statements. To start a business, it is impossible for management to remember each and every transaction for long time. As such, accounting helps in inter- firm and intra-firm comparison. Therefore, accounting data is processed faster using a computerized accounting system. (iii) Convenient: 1434 114B Street SW, Edmonton, AB. By doing this, they are not forced to rely on memory. It is very important that business owners make a habit of recording their business transactions every day. Maintain Business Record. This is particularly true when a businesses chooses the wrong type of accounting for its activities, or fails to update its accounting methods to keep pace with its growth. The accuracy and validity of management account is largely based on the accuracy if financial and cost records maintained. If so, correct and reliable data was available from the costing records which are highly useful to the government, shareholders, the creditors, and the like. (ii) … It will assist in making informed, efficient and precise decisions at any time. Personal Bias. can be compared. Provide assistance to management. Once the business operator has produced the right records, then the tax auditor will be able to examine the records provided and make a timely decision on the accuracy of those records. Here we detail about the advantages and disadvantages of computerized accounting system. It systematically maintains a proper book of accounts of all monetary transactions. If the accounts are maintained properly, records relating to various expenses, sales, gross profit and net profit etc. American Institute of Certified Public Accountants (AICPA) defines accounting as: Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events which are, in part at least of financial character, and interpreting the results thereof. The values can be manipulated easily. Not Guarantee of accuracy: Accounting recorded all the financial transactions with the past value. Few advantages of financial accounting are: Maintain Business Record – Financial accounting records each and every transaction of business organization.