An overview of Single entry bookkeeping system
A single-entry bookkeeping system is a method which involves a one sided accounting system for maintaining the financial records of a company. This system of bookkeeping is very popular with small scale business enterprises. Such business enterprises generally keep records of only basic factors like taxes paid, cash transactions, accounts receivable, accounts payable etc. This blog offers an insight in to the various pros and cons of using the single entry booking system:
- The single-entry bookkeeping systems are known for their straightforwardness. You don’t require the services of a person with enhanced knowledge of bookkeeping and accounting to prepare these bookkeeping records. Whereas, in case of double entry bookkeeping system you will need the services of experienced professionals. So maintaining a single entry system is also economical in terms of cost.
- If you are looking for a bookkeeping system which offers regular records of cash receipts and withdrawals, then single entry bookkeeping system is the best option. This system involves daily and monthly records of cash withdrawals and receipts.
- The various errors related to accounting can be easily documented in this bookkeeping system.
- By having access to double entry bookkeeping system, you can easily derive the financial position of your business.
- This bookkeeping system is ideal for large business enterprises as it enables proper planning and utilization of business finances.
- This bookkeeping system is not considered suitable by large scale business enterprises for proper planning and utilization of the business finances. The usage of this system in large scale enterprises could lead to mismanagement and losses.
- The single entry system does not keep a record of miscellaneous losses like thefts etc.
So it can be concluded that the single entry bookkeeping system can be effectively used by a small scale business enterprise but is not useful for a large scale business.