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ii. To classify the accounts according to its nature.
iii. To check the arithmetical accuracy of transactions by preparing the trial balance.
iv. To detect and rectify accounting errors.
v. To find out the true profit or loss of business during an accounting period.
vi. To reflect the total financial position of a firm by preparing balance sheet.
vii. To provide information and data to management for planning and decision
making process.
viii. To provide records for amendments and to take corrective actions.

Features

The features of double entry system are as follows:
1. Dual Aspects: This implies that there are two aspects for each transaction-
represented by debit and credit entries in accounts. Every debit must have a
corresponding credit and, of course, every credit must have corresponding
debit.

2. Equal Effect: There are two accounts involved in every transaction – debit and
credit. The total debit must be equal to total credit.
3. Classification of Account: Account is classified into three types on the basis of
nature of transactions. They are:
i. Personal Accounts ii. Real Accounts iii. Nominal Accounts
4. Auditing: All the transactions are recorded showing dual effects under this
system which facilitates auditing because dual recording system helps to detect
frauds and errors.
5. Worldwide Acceptance: Accounting maintained under this system is globally
accepted as it is based on certain assumptions, rules and principles.
6. Transfer of Ownership: Transfer of ownership refers to the system of giving
and receiving of financial transaction. For example, sale of goods on cash
transfers the ownership of goods and cash to each other.
Importance and advantages

The advantages of double entry book keeping system are as follows:

1. It presents a complete record of transactions. Because it records both the aspects
of every transaction, which relates to personal and impersonal.

2. Profit and loss account can easily be prepared. The exact reasons for profit
and loss can be ascertained. The information enables the firm to take action to
increase the profit and reduce the loss.

3. It gives the exact information regarding the amount due to the firm at any time,
because the system gives ready references.

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