Single-entry bookkeeping, also known as, single-entry accounting, is a method of

bookkeeping Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organizations. It involves preparing source documents for all transactions, operations, and other events of a business. Tr ...

that relies on a one-sided

accounting Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...

entry to maintain financial information. The primary bookkeeping record in single-entry bookkeeping is the ''cash book'', which is similar to a

checking account A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the ...

register (in UK: cheque account, current account), except all entries are allocated among several categories of income and expense accounts. Separate account records are maintained for

petty cash Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing, and then cashing the cheque. ...

accounts payable Accounts payable (AP) is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents. An accounts payabl ...

and receivable, and other relevant transactions such as

inventory Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the sha ...

and travel expenses. To save time and avoid the errors of manual calculations, single-entry bookkeeping can be done today with do-it-yourself bookkeeping software. Double entry accounting often requires commitment which most sole proprietors cannot afford to do or simply not interested in it. Among these types of businesses it is common for them to only keep records of bill payments and cash they received during the course of the business. Nonetheless, there is some level of record keeping as these businesses are keeping track of income and expenditure of the business. As such, the practice of keeping partial records of business related transactions which is outside the requirements of double entry book keeping is called “single entry accounting” / “Accounting for incomplete records”. Most businesses maintain a record of transactions using

double-entry bookkeeping Double-entry bookkeeping, also known as double-entry accounting, is a method of bookkeeping that relies on a two-sided accounting entry to maintain financial information. Every entry to an account requires a corresponding and opposite entry t ...

. However, many smaller businesses use single-entry books that record the "bare essentials." In some cases, only records of

cash In economics, cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-im ...

accounts receivable Accounts receivable, abbreviated as AR or A/R, are legally enforceable claims for payment held by a business for goods supplied or services rendered that customers have ordered but not paid for. These are generally in the form of invoices raised ...

and

taxes A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, o ...

paid may be maintained. This type of accounting with additional information can typically be compiled into an

income statement An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''stateme ...

and statement of affairs by a professional accountant.

Advantages

Single-entry bookkeeping systems are used because of their simplicity, while double-entry bookkeeping may require the services of a trained person. According to the

Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory t ...

, single-entry bookkeeping is based on the income statement (profit or loss statement). It can be simple and practical for those starting a small business.IRS Publication 583: Starting a Business and Keeping Records Additionally, the IRS states: * A single-entry system does not include equal debit and credit to the balance sheet and income statement accounts. It is not self-balancing. Arithmetic errors in the account totals are thus common. Reconciliation of the books and records to the return is an important

audit An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon.” Auditing ...

step. * A single-entry system may consist only of transactions posted in a notebook, daybook, or journal. However, it may include a complete set of journals and a ledger providing accounts for all important items.

Disadvantages

* Data may not be available to management for effectively planning and controlling the business. * Lack of systematic and precise bookkeeping may lead to inefficient administration and reduced control over the affairs of the business. * Theft and other losses are less likely to be detected.

References

{{DEFAULTSORT:Single-entry bookkeeping Accounting systems