Difference between Single entry system and double entry system
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Answers
Answer:
Single entry system
Definition : Single entry bookkeeping is where a transaction only has to be recorded against one category, either an income account or an expense account.
Example : A cash book is a perfect example of this method of bookkeeping.
Advantage:
Simple And Easy Method Of Recording Transaction. Single entry system does not need any special accounting knowledge and personnel to record financial transaction of the business. ...
Economical. This is another benefit of single entry system. ...
Suitable For Small Business. ...
Time Saving. ...
Easy To Determine Profit Or Loss.
Double entry system
Definition: Double-entry bookkeeping is an accounting system where every transaction is recorded in two accounts: a debit to one account and a credit to another. Example:
example, if a business takes out a $5000 loan, assets are credited $5000 and liability is debited $5000.
Advantage:
Advantages of Double Entry System
Since personal and impersonal accounts are maintained under the double entry system, both the effects of the transactions are recorded.
It ensures the arithmetical accuracy of the books of accounts. ...
It prevents and minimizes frauds. ...
Errors can be checked and rectified easily