7. As the name indicates, single entry is a single record of the transaction—that is, a record of one phase of the transaction only.
Example—John Doe's account would show that he received two tons of coal, but there would be no corresponding account to show that our supply of coal had been diminished.
Single entry fails to fulfil the object of bookkeeping, as it does not exhibit the true financial condition of the business, and is incapable of proof of accuracy.
DOUBLE ENTRY
8. Double entry is a system of making two entries (or a double record) of every transaction. In every business transaction, two distinct factors are involved—namely, that which is received, and that which is parted with. If we sell a given quantity of a commodity, we part with it, and the sale takes from or decreases the value of that particular commodity in our possession. If we sell for cash, the transaction adds to our cash possessions; while if the value of the commodity is debited or charged to the account of a customer, it adds to the amount we are to receive from that customer.
9. Principle of Double Entry. Double entry is a system of debits and credits. One writer expresses it as a system of opposing contra things.
The fundamental principle of double entry is that there must be a corresponding credit for every debit.
Example—When we sell John Doe two tons of coal, we debit his account; but we have decreased the value of our stock of coal, and to complete the double entry, we credit coal account (or Merchandise, as the account representing our stock in trade is sometimes known). When he pays us money, we credit his account, and debit cash.
10. Advantages of Double Entry. The principal advantages of double entry bookkeeping are that the system permits of making an accurate exhibit of the standing of the business; it exhibits the profits and losses; it shows the sources of profits and the causes of losses; it permits of proof of the accuracy of the records.
