SINGLE AND DOUBLE ENTRY SYSTEM

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 A single-entry system records each accounting transaction with a single entry to the accounting records, rather than the vastly more widespread double-entry system. The single-entry system is centered on the results of a business that are reported in the income statement. The core information tracked in a single-entry system is cash disbursements and cash receipts. Asset and liability records are usually not tracked in a single-entry system; these items must be tracked separately.

The double entry system means that every business transaction will involve two accounts. For example, when a company borrows money from its bank, the company's Cash account will increase and its liability account Loans Payable will increase. The basic principle of a double entry system is that there are always two entries for every transaction. One entry is known as a credit entry and the other is a debit entry.

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