Difference Between Single Entry And Double Entry System
The main dissimilarities or difference between single entry system and double entry system of bookkeeping can be pointed out as follows:
1. Meaning
Single Entry System: Unscientific, incomplete and unsystematic method of recording business transactions.
Double Entry System: Scientific, complete and systematic form of recording business transactions.
2. Concept
Single Entry System: It does not follow the concept of duality or two-fold aspect (debit and credit).
Double Entry System: It follows the duality and records the transactions according to the rules of debit and credit.
3. Time And Labor
Single Entry System: It consumes less time, labor and cost to maintain single entry bookkeeping system.
Double Entry System: It requires more time, labor and cost to maintain double entry system of bookkeeping.
4. Suitability
Single Entry System: Suitable for very small business firms.
Double Entry System: Suitable for medium and large scale business firms.
5. Recording
Single Entry System: It maintains incomplete records.
Double Entry System: It maintains complete record of financial transactions.
6. Arithmetical Accuracy
Single Entry System: Trial balance is not prepared in this system. So, arithmetical accuracy cannot be ensured.
Double Entry System: Trial balance is prepared on the basis of this system. So, arithmetical accuracy can be checked.
7. Financial Position
Single Entry System: Balance sheet cannot be prepared on the basis of single entry system. So, financial position of business firm cannot be ascertained.
Double Entry System: Balance sheet is prepared at the end of the period. So, financial position of the business can be ascertained.
8. Profit And Loss
Single Entry System: Trading account and profit and loss account are not prepared. So, profit or loss of the firm cannot be revealed.
Double Entry System: Trading account and profit and loss accounts are prepared on the basis of the bookkeeping system. So, profit or loss of the business can be revealed.
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9. Account Maintained
Single Entry System: Personal account and cash account are maintained by single entry bookkeeping system
Double Entry System: Personal account, real account and nominal account are maintained by double entry bookkeeping.
10. Skill And Knowledge
Single Entry System: It does not require special knowledge and skill to install and maintain this system in the organization.
Double Entry System: It requires accounting knowledge ans special skill to install and maintain this system.
11. Tax Purpose
Single Entry System: It is not accepted by tax authorities.
Double Entry System: It is suitable for tax purpose and accepted by tax authorities.
Single Entry Vs Double Entry System (Comparison Chart)
I hope this post is helpful to understand the difference between single entry and double entry system of bookkeeping and to make comparison between them.
Single Entry Vs Double Entry System (Comparison Chart)
Basis For Difference
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Single Entry System
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Double Entry System
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Introduction
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Incomplete accounting system that records one side of business transactions only
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Complete system of accounting that records both sides (debit and credit) of business transactions
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Duality Concept
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No
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Yes
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Time/Labor Needed
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Less
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More
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Suitable For
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Small business firms
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Big firms
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Recording
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Incomplete
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Complete
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Arithmetical Accuracy
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Does not ensure
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Ensures
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Reveal Financial Position
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No
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Yes
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Ascertain Profit Or Loss
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No
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Yes
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Accounts Maintained
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Cash account and personal account
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Real account, personal account and nominal account
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Requirement Of Skill
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No
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Yes
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Acceptable For Tax
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No
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Yes
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I hope this post is helpful to understand the difference between single entry and double entry system of bookkeeping and to make comparison between them.