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9 Advantages & Importance of Sectional & Self-Balancing Ledger System

Updated on: November 22, 2019 Leave a Comment

In a large business, the maximum increases take place in trade debtors and trade creditors as the accounts of debtors and creditors are separated from other accounts.

Advantages & Importance of Sectional & Self-Balancing Ledger System
Advantages & Importance of Sectional & Self-Balancing Ledger System

Page Contents

  • Advantages & Importance of Sectional & Self-Balancing Ledger System
    • 1. Division of Work
    • 2. Minimization of Fraud
    • 3. Early Detection of Errors
    • 4. Ascertainment of Accuracy
    • 5. Facility for Preparing Final Accounts
    • 6. Keep Confidential Information
    • 7. Effective Control of Personal Accounts
    • 8. Incentive for Efficient Employees
    • 9. Distribution of Work According to Choice

Advantages & Importance of Sectional & Self-Balancing Ledger System

Following are most Advantages & Importance of Sectional & Self-Balancing Ledger System:

1. Division of Work

In sectional and self-balancing system accounting work can be divided into different employees and the responsibility can be fixed for errors.

Therefore, work and be completed easily and quickly.

2. Minimization of Fraud

The different ledgers are maintained by the different persons and as such the dishonest employee will not be able to manipulate accounts.

Therefore, the above system minimizes the possibility of fraud.

3. Early Detection of Errors

Under the above system, errors are localized easily and related ledger will be checked. Errors may be quickly rectified due to the balancing of ledgers.

Related:

  • Self Balancing Ledger System: A Complete Step-by-Step Guide.
  • Sectional Balancing System Practical Examples.
  • Differences between sectional and self-balancing system.

4. Ascertainment of Accuracy

The accuracy of each letter is ascertained independently under the self-balancing system by preparing a separate trial balance for each ledger.

5. Facility for Preparing Final Accounts

Sectional balancing system complete trial balance can be compiled with general ledger and the accuracy of each ledger can be ascertained.

Its facilitation of the preparation of final accounts.

6. Keep Confidential Information

It is decide desired to keep confidential information regarding owners’ capital, Reserves, and Profits from the office staff.

A separate ledger may be prepared and kept in the charge of the trustworthy person under the above methods only.

Bonus: How to Become a Successful Salesman? 33 Qualities (Complete List).

7. Effective Control of Personal Accounts

Control accounts provide quick means of ascertaining the up to date amount owing to and by the business. It is very useful for management.

8. Incentive for Efficient Employees

Under the above systems, errors are localized and the responsibility of error maker is also pinpointed.

Hence, there is a clear Distinction between Efficient and inefficient employees. and management can take action against inefficient employees and motivate efficient employees.

9. Distribution of Work According to Choice

Under the above systems, work can be divided into different employees according to their choice.

This work can be completed quickly and effectively.

Read More

  • Sectional Balancing System: Explanation with Examples
  • Financial Statements: Meaning Nature And Objectives
  • Rectification of Errors Under Sectional Balancing System (Step by Step)
  • 9 Important Steps of Employee Selection Process (Explained)
  • Capital Expenditures and Revenue Expenditures with Examples (Explain)
  • Capital Profits And Revenue Profits with Examples (Explain)
  • Top 10 Difference between Management Accounting and Financial Accounting
  • Capital payments And Revenue payments with Examples
  • Top 10 best Qualities of an Ideal Financial Statement
  • Top 4 Types of Financial Statements For Reporting
  • Balance Sheet: Definition, Format and Sample (Explained)

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