While watching market segments, we can see that most businesses maintain a record of their all transactions as per double entry bookkeeping system. But sometimes, may small and simple businesses prefer to use single entry bookkeeping system to record all their transactions. Single entry systems are usually inadequate apart from where transactions are too simple and the volume of activity is also low.
Single Entry System is a method of maintaining and keeping the accounts parallel to checkbook register and according to it single line entry is done in the journal for each transaction. It means each transaction has only one entry either positive or negative. Someone has prescribed that Single Entry Bookkeeping is a system in which transactions are recorded in a single record.
We can also say single entry bookkeeping system is an incomplete form of double entry bookkeeping as it does not show on equal debits and credits. It is also facts that all the businesses are not using single entry bookkeeping system and the reason why they are not using it is they have a high number of financial transactions and single entry is not preferable for large businesses.
Advantages of Single Entry Bookkeeping System:
- It is being used in the interest of simplicity
- It is less expensive compare to double entry bookkeeping system
- It is not require a professionally trained person
Disadvantages of Single Entry Bookkeeping System:
- It is difficult for management to do effectively planning and controlling the business as perfect data may not be available
- As it does not show the perfection and it may lead to inefficient administration and may be reduce the control over the business affairs
- The major disadvantage of this system is that it does not provide a check against clerical error.
Even today, there are some small businesses which do not require balance sheet and other accounts. A self employed bookkeeping system is not required to produce a balance sheet because ultimately the owner has to handle the whole situation and of course it is his personal business.
Single entry bookkeeping system is as simple as making the data for sales income and purchase expenses. For small business single entry bookkeeping system is valuable which requires less or nil bookkeeping knowledge and accounting professionalism.
Small businesses can produce their accounts without any help of professional bookkeeper and expert accountant. To get more idea about single entry bookkeeping system, please visit us at http://www.bookkeepingservicesindia.com.
Article Source: http://www.articlesnatch.com/Article/Deeply-Analysis-for-Single-Entry-Bookkeeping-System/663992
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