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Home Analysis of Business Transactions and Double Entry System Difference between Double Entry System and Single Entry System
 
 

Difference between Double Entry System and Single Entry System:

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The following are the points of difference between single entry system and double entry system:

 

Double Entry System

 

Single Entry System

1. Both the aspects of a transaction are recorded in it. So complete analysis of a transaction is possible. 1. For some transactions both the aspects are recorded, while for some other transactions only one aspect is considered. Again, some transactions are not recorded at all. Thus, complete analysis of a transaction is not always possible.
2. All the difference classes of accounts - assts a/c, liability a/c, capital a/c, expense a/c and revenue a/c - are maintained. 2. Only cash accounts and personal accounts are maintained.
3. It is possible to verify the arithmetical accuracy of books through trial balance. 3. As under this system both the aspects of all transactions are not recorded, it is not possible to prepare trial balance and thereby verify arithmetical accuracy of books of account.
4. In this system profit and loss account can be prepared and the result of the business can be determined thereby 4. Under this system no account is maintained in respect of income or expenditure. So it is not possible to prepare profit and loss account. However, profit and loss is determined through a statement by comparing closing capital with the opening capital, but is is not so reliable.
5. The financial position of the business can be compared through balance sheet. 5. No account is maintained in respect of assets and liabilities. So, balance sheet cannot be prepared. However, a statement of affairs is prepared on the lines of balance sheet. But it is not regarded as a reliable document, since the values of assets and liabilities are not obtained from the regular books of accounts.
6. All the necessary information is available from this system at any time. 6. As no detailed record is maintained in respect of all transactions full information is not available from the books of account.
7. It is easier to detect mistakes and deflections under this system. 7. Mistakes and deflections cannot be detected easily under this system.
8. This system is based on scientific method 8. It does not follow any scientific rules.
9. Accounting is complex and costly under this system 9. Accounting is less complex and less costly under this system.
10. This system requires men with special knowledge. 10.  Men with common knowledge will do in this case.
11. In the first stage each transaction is recorded in a book named "journal" and therefore it is posted in another book named "ledger" in the second stage. 11. There is no rule here as such.
12. Since accounting under this system requires a large number of employees, it may not be possible to maintain secrecy. 12. Here secrecy can be maintained, since only a few persons are sufficient for performing accounting job.
 

More study material from this topic:

 Analysis of Business Transaction
 Double Entry System
 Single Entry System
 Difference Between Double Entry System and Single Entry System
 What is An Account?
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Financial Accounting Topics


  Introduction to Accounting
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  Transactions and Accounting Equation
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  Analysis of Business Transactions
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  Journal, Ledger and Trial Balance
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  Accounting for Bills of Exchange
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  Special Journals
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  Cash Book
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Bank Reconciliation Statement
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  Final Accounts
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  Work Sheet
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  Capital and Revenue Items
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  Valuation of Inventories
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  Accounts of Non-profit Making Organizations
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  Statement of Cash Flows
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  Accounting Ratios Analysis
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  Depreciation, Provisions and Reserves
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  Accounting Dictionary
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  Financial Calculators
 
 
 
Managerial Accounting Topics

  Financial Statements
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  Cost Volume Profit Relationship
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  Variable Costing System
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  Materials and Inventory Cost Control
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  Activity Based Costing System
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  Standard Costing and Variance Analysis
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  Balanced Scorecard
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  Capital Investment Analysis/Capital Budgeting
 
 

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