Business Accountant Tutorial | System of Accounting

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System of accounting

Let’s learn about the system of accounting.

• Single Entry System:

  The single entry system is an economical and time-saving system of accounting. It is an unscientific system as it involves the incomplete recording of business transactions and not recording some transactions at all. This is not a separate system in itself. It is only an imperfect application of the double-entry system of book-keeping. Under the single entry system, only one aspect of the business transaction is recorded i.e. the personal aspect and the rest are ignored.

• Double Entry System:

  The double-entry system is based on the scientific principle and is generally used by all the business houses. This system of accounting purely recognizes the dual aspect of each transaction and records both the aspects from the point of view of each related party involved in the transaction. Every transaction has a dual effect, the account that involves the receiving aspect is debited and the account that involves the giving aspect is credited thus each and every transaction is recorded in the books in such a manner so that both the aspects can be reported clearly. It the modern method of recording.

Advantages of Double Entry system of accounting

• Helps in keeping a complete record of the business transaction
• Helps in preparing detailed profit and loss account, to show the profit earned and the losses incurred during a given period.
• Detailed information regarding the value of assets and the profit earned during a period can be obtained.
• Accurate information with regard to any account can be easily obtained.
• Provides a check of arithmetical accuracy of the accounts in consideration.

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