Purpose of management accounts

The reasons for managing accounts are as follows:

1. Ensure accuracy

They take care of the accuracy of entries made in the personal information in the sales list and the purchase book. It's very easy to make a mistake in posting a post, because there could be hundreds of posts to do. Numbers could be recorded. Some entries may be omitted completely, so an account or payment will not appear on your personal account as it should. By comparing:

o The total amount of the debtor of the account with the total number of individual debts on personal accounts in the sales list.

o Total cost of creditors account with the total number of individual debts on the personal account in the purchase book.

It is possible to identify the fact that errors have been made.

2. Location errors

It could also help to find errors where the status of the management accounts is daily or weekly or even monthly. If a clerk fails to set up an account or payment in a personal account or makes a commercial error, it would be a great job to find the error or error at the end of the year, say that hundreds or thousands of transactions during the year.

Using the management account, you can compare the individual balance of the sales or purchase book for each week or day of the month, and the error was found much faster than if there were no accounts.

3. Internal Control

As a separate accounting requirement is provided, the management account gives an internal check. Anyone who submits entries to the accounts will act as a survey of another person who works by sending items to sales accounts and buying account accounts.

4. More simply and quickly

To provide debtors and creditors with a faster balance to create a legal position or balance sheet. The individual balance of the management account is obviously expected more quickly and quickly than many individual balances in the sales or purchase book.

This also means that the number of accounts in the double-entry accounting system can be held down to manageable size, since the private accounts are only in notebooks and the management accounts replace accounts required for dual transaction.

Source by Randika Lalith Abeyinghe

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