STEPS INVOLVED IN DOUBLE ENTRY SYSTEM

 

(a) Preparation of Journal: Journal is called the book of onginal entry. It records the ctirect of all 

transactions for the first time. Here the job of recording takes place. 

(b) preparation of Ledger: Ledger is the collection of all accounts used eb a grouping of accounts is 

performed. Journal is posted business. Here the ledger. 

(c) Trial Balance preparation: Summarizing. It is a summary of ledge balances prepared in the form of a list. 

(d) Preparation of Final Account: At the end of the accounting period to know the achievements of 

the organization and its financial state of affairs, the final accounts are prepared. 

1.4.4 Advantages of Double Entry System 

i) Scientific system: This system is the only scientific system of recording business transactions in a set 

of accounting records. It helps to attain the objectives of accounting. 

ii) Complete record of transactions: This system maintains a complete record of all business 

transactions. 

iii) A check on the accuracy of accounts: By use of this system the accuracy of accounting book can 

be established through the device called a Trail balance. 

iv) Ascertainment of profit or loss: The profit earned or loss suffered during a period can be 

ascertained together with details by the preparation of Profit and Loss Account. 

v) Knowledge of the financial position of the business: The financial  of the firm can be ascertained 

at the end of each period, throug position h the preparation of balance sheet. 

vi) Full details for purposes of control: This systeman permits accounts to bed, therefore, affords 

prepared or kept in as much detail as neces significant information for purposes of control etc.sary  

vii) Comparative study is possible: Results of one year may be compared with those of the precious 

year and reasons for the change may be ascertained. 

viii) Helps management in decision making: The management may be also to obtain good 

information for its work, specialls- for making decisions. 

ix) No scope for fraud: The firm is saved from frauds and misappropriations since full information 

about all assets and liabilities will be available.