Learning Materials For Accounting, Management , Finance And Economics.

Sunday, July 25, 2010

Advantages Of Single Entry System

Single entry system is a simple, economical and easy method to record monetary  transactions of the company. The following are the important advantages of single entry system:

Simple And Easy

Single entry system is simple to understand and easy to maintain as it has no fixed set of principles to follow while recording financial transactions.

Economy

Single entry system is an economical system of recording financial transactions. It does not require hiring skilled accounting personnel to record financial transactions of the business. Further, it does not require large number of books to record the limited number of financial transactions.

Easy To Calculate Profit

Under single entry system, the amount of profit can be determined easily. The amount of profit or loss of the period can be determined by making comparison between the amounts of closing capital and opening capital.

Suitable For Small Business

The single entry system is simple, easy, and economical system. It is suitable for small businesses because they can not afford the cost of double entry system. Besides, small business are not required to maintain their books of accounts under double entry system.