Earlier in Part A, the basic principles of classification of accounts have been discussed.This article relates to the readers the various advantages of having designed a proper set of classified accounts.
| Advantages of a properly designed classification of accounts: |
- It facilitates the recording of business transactions by the provision of suitable and self-defined ledger accounts;
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- It facilitates the preparation of financial and revenue statements without any further re-arrangement and analysis of information contained in the ledger accounts
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- It provides for expansion or alteration in the ledger accounts resulting from necessary changes in the business or industry
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- It provides the plan for the accounting records inasmuch as the original data and books of original entry will be in keeping with the particular classification desired
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- When represented by a chart of accounts ( usually contained in an Accounting manual), such acts as a guide to the staff in the recording of transactions
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- By the use of account symbols,economy in clerical effort is achieved
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- It materially aids the summarization of accounts for the purpose of comparison
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