How Single and Double Entry Bookkeeping Differs – Key Specifications

When you start a small business, then your first financial decision has to be whether you are going to use single or double entry bookkeeping. If finance is not your strong point then you should not look forward to dealing with the accounting side of the business, and must hire a professional to help with the process.

A business has to keep a detailed accounting of their financial transaction. This process is known as bookkeeping. The durability of the business depends on the owner’s ability to establish good accounting practices. There are two types of bookkeeping services i.e. Single Entry Bookkeeping Service and Double Entry Bookkeeping Service. Deciding on the right one is a key aspect for your business. Therefore, below we have provided a detailed difference between the two to help you make the best decision when you are looking for professional services for bookkeeping in Adelaide, or anywhere else:

·      Single-Entry Bookkeeping

It is a method of bookkeeping relying on a one-sided accounting entry to maintain the financial statement of the business accounts. If your business is simple and small, it is working for you. Single entry bookkeeping is similar to keeping your own personal checkbook. You use single entry bookkeeping service to keep a record of transactions like cash, tax income, and tax-deductible expenses.

In this bookkeeping system, you can actually keep a two-column record book, one column for expenses and one for revenue. It’s considered single-entry because there is only one line for each transaction. This type of bookkeeping service is not for large and complex companies, because it doesn’t track accounts like account payable, account receivable and inventory. You can use this bookkeeping service to calculate net income but you can’t use it to track the assets and liability accounts and develop a balance sheet.

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Double-Entry Bookkeeping

Most of the business owners including small and large businesses use double-entry bookkeeping for their accounting needs. In double-entry bookkeeping, each account has two columns and that each transaction is located in two accounts. Two entry methods are made for each transaction, you can debit in one account and credit in another. A company wants to pay off a creditor; this is the example of double entry transaction.

You can use double-entry bookkeeping instead of single-entry if you want to keep track of assets and liability account. Another advantage of double-entry bookkeeping service over single-entry bookkeeping is that the owner can accurately calculate loss and profit in a complex organization and errors and frauds are easy to detect and financial statements can be prepared directly from the books.

So, which one do you find fitting to your needs? The above brief would help you to pick the right service for bookkeeping in Adelaide, or wherever your business is located.