Double Entry vs Single Entry
Double Entry system:
Double entry system can be define as the system under which the double effect of every transaction is recorded,it means that all cash and credit transaction of the business are recorded indicating the two-fold aspect of each such transaction, for e.g when merchandise is sold for cash, the increase cash as well as decrease in stock of merchandise is recorded. It means that every benefit in business have its corresponding loss. This is the famous principal of Double entry system and read as
“Every Debit must have its corresponding credit”.
Therefor under double entry system every debit
and its corresponding credit is recorded in the books of accounts.
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Single Entry system:
Single entry system is the oldest system of recording the business transaction.It is very simple and easy. No professional knowledge is required to use this system. There is no definite or principal of this system.
The small traders use this system to meet their needs.The book of accounts to be maintained mainly depend on the need of the trader.The complete record of all the transaction are not kept, but only the record necessary to be recorded are maintained like cash book, personal ledger etc it is an incomplete record and therefor unreliable for the reference and analysis purpose.
This system does not indicate the true earning and financial position of the business.