Single-entry bookkeeping system
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Single-entry accounting system is a one sided accounting entry to maintain financial information.
[edit] Overview
Most businesses maintain a record of all transactions based on the double-entry bookkeeping system. However, many small, simple businesses maintain only a single-entry system that records the "bare-essentials." In some cases only records of cash, accounts receivable, accounts payable and taxes paid may be maintained. Records of assets, inventory, expenses, revenues and other elements usually considered essential in an accounting system may not be kept, except in memorandum form. Single-entry systems are usually inadequate except where operations are especially simple and the volume of activity is low.
This type of accounting system with additional information can typically be compiled into an income statement and balance sheet by a professional accountant.
[edit] Advantages
Single-entry systems are used in the interest of simplicity. They are usually less expensive to maintain than double-entry systems because they do not require the services of a trained person.
[edit] Disadvantages
- Data may not be available to management for effectively planning and controlling the business.
- Lack of systematic and precise bookkeeping may lead to inefficient administration and reduced control over the affairs of the business.
- Single-entry records do not provide a check against clerical error, as does a double-entry system. This is one of the most serious defects of single-entry systems.
- Single-entry records seldom make provision for recording all transactions. In addition, many internal transactions, such as adjusting entries are often not recorded.
- Because no accounts are provided for many of the items appearing in both the Income Statement and Balance Sheet, omission of important data is possible.
- In the absence of detailed records of all assets, lax administration of those assets may occur.
- Theft and other losses are less likely to be detected.
