Understanding the concept of book keeping

1. System of book-keeping
Name : Rahul Sharma
Subject : Principal Of Accounting
Faculty Name : Ms. Deepika Arora

2. System of book-keeping
Book-keeping is the art of recording
business transections in a regular and
systematic manner. This recording of
transections may be done according to any
of the following two systems:
1.Single Entry System
2.Double Entry System

3. System of book-keeping
Single Entry System
 An incomplete double entry system can be termed as
a single entry system.
 It is a system of book-keeping in which as a rule only
records of cash and personal accounts are maintained.
 This system has been developed by some business
houses, who for their convenience, keep only some
essential records.
 Since all records are not kept, the system is not
reliable and can be used only by small firm.

4. System of book-keeping
Double Entry System
 The system of double entry book-keeping is the only
system of recording the two aspect of the transection.
 The system recognises that every transection has a
two effect.
 If some one receives something then either some
other person must have give it, or the first mentioned
person must have lost something, or some services
etc. must have been rendered by him.

5. Single-entry Double-entry
Duality Is not based on the
concept of duality.
Is based on the concept
of duality.
Accounts Maintains simple and
personal accounts of
debtors, creditors and
cashbook.
Maintains all personal,
real and nominal
accounts.
Profit Or Loss Cannot help in making
the company’s profit or
loss statement.
Can help in making the
company’s profit or loss
statement.
Suitability Small businesses where
transactions are small
and simple.
Big businesses and
corporations that deal
with complex
transactions and huge
inventories.
Difference between Single entry
and double entry book-keeping

6. Financial Position Cannot ascertain the
true financial position of
the business.
Can ascertain financial
position of the business.
Advantages Simple, less-expensive,
easier to manage,
provides general view of
earnings and
expenditure.
Complete data is
available, provides an
arithmetic check on
bookkeeping, helps
track debits and credits,
can help ascertain the
financial position of the
business, makes it
easier to produce year-
end accounts.
Disadvantages Incomplete data, are
not able to provide a
check against clerical
error, does not record
all transactions, does
not provide a detailed
record of assets, theft
and loss cannot be
detected.
Expensive, harder to
understand, requires
hiring external staff and
time-consuming.