Write the difference between single entry system and double entry system.
The major differences between single entry system and double entry system are as follows −
|Single entry system
|Double entry system
Tells about cash, debtors and creditors cash balances only.
Records transactions related to business only.
Incomplete system of recording the transactions.
Can easily record fraud transactions.
Hard to find errors.
Persons accounts and cash accounts are included.
Not accepted by taxation department.
Takes lot of time in calculation profit/loss.
Suitable for small business.
Cost of implementation is not required.
Reconciliation of accounts is not possible.
Special knowledge is not required in maintaining books.
Trail balance can’t be prepared.
Not suitable for tax purpose
Difficult to prepare financial statement
Difficult to tell about financial position
Tells about every business financial entity.
Records all effects of transactions.
Complete system of recording the transactions.
Difficult to record fraud transactions.
Easy to identify errors.
All accounts are considered.
Accepted by taxation department.
Easy to calculate profit/loss.
Suitable to all types of business.
Cost of implementation is required.
Reconciliation of accounts is possible.
Special knowledge is required in maintaining books.
Trail balance can be prepared.
Suitable for tax purpose.
Easy to prepare financial statements.
Can easily tell about financial position.
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