Single-entry bookkeeping or single-entry accounting is a method of bookkeeping relying on a one sided accounting entry to maintain financial information. It's also known as incomplete or unscientific method for recording transactions.
Most businesses maintain a record of all transactions using double-entry bookkeeping. However, many smaller businesses keep only a single-entry book that records the "bare essentials." In some cases, only records of cash, accounts receivable, accounts payable and taxes paid may be maintained.
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Single-entry systems are used in the interest of simplicity. If double-entry bookkeeping is needed, then the services of a trained person are often required.
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 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.
- 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.
- IRS Publication 583: Starting a Business and Keeping Records