Single and Double Entry Bookkeeping

Single-entry accounting and Double-entry accounting

It should not matter what type of business you operate, and even if you are a freelancer, it is important to keep track of your work or business expenses. The type of business you operate, the level you are at, and your potential for growth and expansion, should all play a part when choosing bookkeeping methods.

Single Entry or Double Entry Bookkeeping

Bookkeeping Methods

The two main options for keeping your accounts are the single and double entry systems of accounting.

Single-entry Accounting

The single-entry accounting system is often likened to a register. It only takes account of what comes in and what goes out, nothing else. In effect, it is a daily and monthly summary of cash disbursed or received. The two tables below show examples of accounting records using the Single-Entry Accounting method.

Example 1

Date Description Amount ($)
Jan 3, 20xx Starting balance (Capital) 2,500.00
Jan 4, 20xx Office Furniture (833.40)
Jan 9, 20xx Digital copier 100.00
Jan 13, 20xx Scanner 89.00
Jan 18, 20xx 4 Piece Office set 599.00
Jan 19, 20xx Repairs and maintenance (1,100.00)
Jan 23, 20xx Utilities (205.00)
Jan 28, 20xx Scanner 89.00
Jan 31, 20xx Ending balance 1,238.60

Example 2

Date Description Revenue ($) Expenses ($) Balance ($)
Jan 3, 20xx Starting balance 2,500 2,500
Jan 4, 20xx Office Furniture (833.40) 1,666.60
Jan 9, 20xx Digital copier 100.00 1,766.60
Jan 13, 20xx Scanner 89.00 1,855.60
Jan 18, 20xx 4 Piece Office set 599.00 2,454.60
Jan 19, 20xx Repairs and maintenance (1,100.00) 1,354.60
Jan 23, 20xx Utilities (205.00) 1,149.60
Jan 28, 20xx Scanner 89.00 1,238.60
Jan 31, 20xx Ending balance 1,238.60
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While Single entry accounting is very easy to implement and use, it is criticised for being an incomplete system. It is not guided by rules and principles, does not allow for arithmetical accuracy, proper checks and balances or show a true profit and loss position.

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Double-entry Accounting

In the double entry accounting system, each account has a debit and a corresponding credit. At the end total debits must be equal to total credits – if they do not equate then this is an indication that something is incorrect – maybe an item was omitted, a wrong figure was recorded or it could be a number of other possibilities.

One can choose between using an accounting software or a double entry spreadsheet to record financial information. If you are not familiar with bookkeeping, an accountant should be able to help you with the basic set-up and explanation as to the use of one of the more manageable accounting systems available. This is especially important for limited liability companies since more is required of them by tax authorities, for example, they are required to file annual returns, and pay specific taxes. An accountant can also help to direct staff as to proper record keeping procedures.

Despite the benefits of using an accountant, due to finances, it is not always possible to hire help; so if you prefer, you could opt to learn the accounting basics first, then try to manage on your own using an accounting software. There are many accounting tutorials available online to help you get started.

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The double entry system of accounting by design is the more detailed and accurate of the two. Its balance sheet allows for a check of arithmetical accuracy of the accounts, it works within specific time periods, looks at both sides of a transaction and incorporates real and nominal accounts. Guided by many accounting rules and principles, it is also viewed as scientific and systematic, and gives a more accurate reflection of a business’ profits and losses and overall financial position.

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In addition to choosing a bookkeeping method, here are some things to do in order to put your business expenses into perspective:

Bank accounts

  • Keep separate accounts for business and personal use
  • Establish an overdraft facility with your bank even if you do not think you need it now
  • Deposit cash with the bank as soon as it is received


  • Make budgets for production, sales and cash flow. Always match your budgeted projections with what actually occurred and analyse the results


  • Make payments by cheques
  • Set credit limits for each supplier, make sure credit terms are agreed to and complied with. Of course in business you will need to ‘give and take’ at times but be careful of what you give and what you take
  • If possible, establish a fund for petty cash. Do not make purchases from sales or your cash register!

I will be posting other articles and resources to help in this area.

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  1. Your articles so interested, thank you so much for this vital information, that I require for my new business. Keep up the great work.

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