Under the single-entry system of bookkeeping, the cash book and individualized accounts of creditors and debtors are maintained, and no other ledger is maintained. Every transaction of the business is recorded in the cash book without applying the principles of the double-entry system of bookkeeping. The nominal accounts and real accounts aren't recognized under this system.
Advantages of Single-Entry Bookkeeping
Simplicity
Single-entry bookkeeping is a direct accounting approach, as it involves fewer complications in recording, and firms or individuals are recording only one entry at a time. Because of its straightforward nature, the single-entry bookkeeping method can be performed by individuals who have little or no previous experience in accounting.
No tools required
The tools needed in a single-entry system are pencil and paper. Only revenue and expenses are recorded using single-entry bookkeeping. Therefore, this can save small businesses money because there is no need for expensive accounting software. It is important to note that single-entry bookkeeping is utilized mainly in manual accounting systems.
Ideal for start-ups and small businesses
Start-ups and small businesses may find a single-entry system more suitable. As a new firm or smaller company, their sole focus will be tracking profits and losses. Single-entry bookkeeping helps these businesses record their finances in a streamlined and concise way.
Assists in maintaining finances
Another benefit for small businesses and start-ups is that single-entry bookkeeping can help these firms visualize all funds coming in and going out. In this way, a company can observe any problem areas in its financial records and maintain the financial health of the business.