Single Entry System - Commerce PDF Download

The most significant problems associated with a single entry system include:

• Assets. Assets are not tracked, so it is easier for them to be lost or stolen.
• Audited financial statements. It is impossible to obtain an audit opinion on the financial results of a business using a single entry system; the information must be converted to a double entry format for an audit to even be a possibility.
• Errors. It is much easier to make clerical errors in a single entry system, as opposed to the double entry system, where separate entries to different accounts must match.
• Liabilities. Liabilities are not tracked, so you need a separate system for determining when they are due for payment, and in what amounts.
• Reporting. There is much less information available upon which to construct the financial position of a business, so management may not be fully aware of the performance of the business.

Single entry systems are strictly use for manual accounting systems, since all computerized systems utilize the double entry system instead.

It is generally possible for a trained accountant to reconstruct a double entry-based set of accounts from single entry accounting records, though the time required may be substantial. By doing so, you can then reconstruct the balance sheet and statement of cash flows.