Single Entry System of Accounting

As the name indicates it is a method of accounting or bookkeeping to record or maintain financial transaction on one side of the book. For a proper record and accuracy, it is vital to to maintain a double entry system. At times, however, a business may need to record information one sided only. This may be the case like in micro small business like shops, self employed or freelance workers. If the volume of activity is low, the single entry system my sufficient for maintaining financial record.

A single entry system may be based on either one column or two columns. A common misconception is that a single entry system is one column. This is not true. Number of columns does not matter. The main difference between a single and double entry system is that in the former there is only entry for each transaction while in the latter case, there are always two opposite entries for one transaction.

Advantages of Single Entry System

1. Simple and Easy.
2. Less expensive
3. May be self maintained. Not required to hire a professional
4. May not require use of software or other sophisticated programs
5. May not require specialist knowledge of accounting.
6. Assets are lost or stolen as these are not tracked.
7. No audit of financial statements is possible.

Disadvantages of Single Entry Bookkeeping

1. Not suitable if the activity volume is high
2. High chances of inaccuracies and error.
3. Not self balancing
4. Does not provide detailed information for effective planning.
5. Does not record all transactions.
6. Losses like theft, leaks, errors etc. cannot be easily detected

Example of Single Entry System

This a hypothetical example of a single entry bookkeeping based on one column.

Entry Date
Description of item                                             Amount
December 1 Opening Balance 15000.00
December 3 Purchased Office Supplies (120.00)
December 11 Items Sold 400.00
December 20 Item Sold 500.00
December 26 Items Sold 300.00
December 27 Services at Grand Hotel 100.00
December 30 Paid Utility Bills (50.00)
December 31 Closing Balance 16130.00

The following is an examply of single entry system of accounting based on two coloumns.

Entry Date       Description of item      Revenue Expenses Balance
December 1 Opening Balance 15000.00
December 3 Purchased Office Supplies     120.00 14880.00
December 11 Items Sold    400.00 15280.00
December 20 Items Sold    500.00 15780.00
December 26 Items Sold    300.00 16080.00
December 27 Services at Grand Hotel    100.00 16180.00
December 30 Paid Utility Bills      50.00 16130.00
December 31 Ttoal – Closing 1300.00     170.00 16130.00
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