Advantages And Disadvantages of Single Entry System of Accounting

Single Entry System is suitable for small enterprises but these businesses can adopt Double Entry System of Bookkeeping that have lots and Advantages and some Disadvantages. Single Entry System has some advantages but it is not Recommended in Modern Accounting, especially for Lager Business Organizations.

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Advantages / Merits of Single Entry System

1. It is less expensive and simple to use as there are some main accounts for Bookkeeping to be maintained such as Journal Proper or General Journal, Cash Book, Accounts Receivable and Accounts Payable.

2. It doesn’t requires any Specialized Qualification and Skill. Any Ordinary person having common sense can do the business and earns huge Net Profit / Net Income if Sales increases during the Accounting Period with Less Expenses.

Disadvantages / Demerits / Drawbacks of Single Entry System of Bookkeeping

1. Due to Lack of Proper Books of Accounts, true Accounting Information can not be obtained that is very helpful for the Users of Financial Statements that are interested and connected with the performance, position and success of the business.

2. There are more chances of Mistakes, Errors and Frauds and as sometime one aspect of Business Transactions and sometime complete Accounting Journal Entry is not recorded in the Day Book.

Conclusion of Single Entry System of Bookkeeping

So, we can say that despite Single Entry System of Bookkeeping has many limitations and disadvantages, but still it is suitable for new comers and small scale business to operate and test the results and if successful, then they can maintain Proper Books Accounts through Double Entry System of Bookkeeping.