Types of Book Keeping

Types of Book Keeping

There are basically two types of book keeping.

1. Single Entry
2. Double Entry

1. Single Entry System

Single entry system only one aspect is recorded, this system is followed in small scale operation or in business which is self managed. The typical single entry system consist of three types of books. one is receivable from customer , the book contains information payable to supplier and third is cash sales record.

Advantages of Single Entry System

1. It is simple to adopt
2. It require no special skills to maintain books of accounts.
3. Less costly as compared to double entry system

Disadvantages of Single Entry System

1. it is not a system but is a practice
2. No accurate results of operation can be prepared
3. Mistakes remains undetected

2. Double Entry System

In double entry system believe that every transaction has two aspects and both aspect should be recorded. In technical terms it is called rule of debit credit and it fundamental rule that every debit has credit and every credit has a debit. This system has a check and balance and things can be internally reconciled for mistakes and errors.

Advantages of Double Entry System

1. Final result of operation can be calculated accurately
2. Most of the errors can be detected
3. Fraud can be minimized due to less chances of manipulation of record
4. Based on Scientific rules and principals
5. Universally acceptance due to internationally recognized rules.

Limitation of Double Entry System

1. It require special skill of accounting for maintain the books of accounts.
2. It is costly process may not be possible for small organization