Disadvantages of Accounting

>> August 4, 2010


If you search same query on the google, you will look About 1,670,000 results (0.21 seconds) in result form. But you will not see even a single content, who will say to you that accounting has big mistakes for business. In simple word, there is no disadvantages of Accounting because accounting is a simple to record and show the results of company's operating and financial position.

Then, we google is showing the result in big quantity, answer is very clear. Google is doing nothing but those who do not know about a, b and c of accounting will want to know its disadvantages before learning this science. So, they provide and google finds it from his famous result relating to other accounting related queries.

I am working continually in this field since my first time study of accounting in 1996. So, after spending 14 years in accounting, I did not find even a single disadvantage in accounting.

But, technically this query should be disadvantages of accounting errors. Because search is done by simple and known persons, so they also do not know the difference between accounting and accounting errors. So, I am explaining the disadvantages of accounting errors, here for general awareness on this topic.

Ist Disadvantage : A businessperson who runs his business without properly kept accounting data will not the correct information of his business's profit and financial position.

2nd Disadvantage : A businessperson can loss his reputation in the market due to wrong dealing after faithing on error accounting reports. For example, suppose, I sell goods to USA company of $ 10,000 but by mistake , accountant of that company sent me $ 1000. This is accounting error and recorded $1000 as total payment of sale by me. Now that company's image and reputation will be decline with this action, because as seller, I  has to buy the goods and after getting low amount, my working capital will be affected badly. I will break my relation with that company for selling goods on credit.

3rd Disadvantage : Your employee can also break relation with your company, if your company's accountant did mistake in payroll and salary providing system. For example, suppose, a multinational company is doing the business in India and appoints some employees in India for his work. After doing work, MNC's accountant has to send salary to them, because to make payroll and issue the check is the part of the duty of accountant. Suppose, check should be issued in Indian currency payable in local bank but by accounting mistake, check is issued in USA dollar. So, employees salary will be delay about 3 months. But if accountant did not do this mistake, employee of MNC can get his salary with in one month. So, this is big practical disadvantage of accounting error. Employee has also to pay 3% foreign exchange charges for this mistake. That is too bad.

4th Disadvantage : In end, I can say that accounting errors can have adverse effects on the operations of the entire business. All departments like marketing, hr, research and production are connected with accounting and finance department. A single mistake in accounting department can disturb the normal working of all the departments. Even share market's share value may decrease with accounting errors. Even GDP may also affected with accounting errors. Accounting errors can show us his horrible form. So, please don't a single accounting error.

Related : Financial Accounting





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