Public-Private Partnership in Stadium Financing
In the previous articles, we have already seen that funding a stadium can be very difficult from a financial point of view. The financial aspects of stadium financing can be challenging regardless of whether the financing will be provided by the government or by private parties. It is important to note that stadium financing can […]
Advantages of Strategic Financial Management
The field of strategic financial management has become increasingly popular in the past few years. This has been because of the various advantages that accrue to the practitioners of this philosophy. In this article, we will have a closer look at some of the important advantages which result from following this philosophy. Aligns The Vision […]
Problems Related to Facebook, WhatsApp, and Instagram Mega Merger
In the previous article, we talked about Facebook’s plan of becoming a social media conglomerate by merging different apps like Facebook, WhatsApp, and Instagram. We also spoke about the enormous economic benefits that Facebook as a corporation will derive from the merger of these diverse apps. However, for the moment, it does not seem like […]
Creating a Revenue Model
A financial model is often called a “model of models.” This is because there are several parameters which go through a series of complex calculations themselves. Revenue is a perfect example of one such parameter. For the financial model as a whole, the revenue number is just one of the many inputs required for the […]
Fraud Prevention Using Positive Pay
As we have already seen in previous articles, corporations all over the world have started automating their payments. Unfortunately, a high degree of automation has also given rise to a high degree of financial fraud. This has created an opportunity for a commercial bank to provide a service to their corporate customers. This is where […]
Single entry accounting systems record only one side of every transaction. This happens because they use one entry to record every transaction. Therefore single entry system does not use nominal and real accounts. The emphasis is on cash and accounts receivable.
Single entry accounting system can be described as a system that businesses use to get by rather than something that companies may find desirable.
Single entry system is used by small firms that have just started business. Such firms do not have the resources that are required to put up a full-fledged accounting system in place. Hence they begin with a single entry accounting system. However as and when their business grows most firms are compelled to adopt the double entry system. This is because the single entry system is highly inefficient and can be used only by sole proprietors when the scale of business is very small and the transactions to be undertaken are not very complicated.
The biggest problem with single entry bookkeeping system is that of incomplete records. Single entry system records only transactions that the firm is undertaking with external parties. There are numerous transactions within the firm that are of vital importance and need a place in the financial statements. However, the single entry system ignores these needs and gives incomplete information to the management.
Single entry accounting system does not have provisions for reconciliation of accounts. This means that the system does not have inbuilt error detection. Therefore, if a clerk is doing the task of making entries in the book, the system may be prone to clerical errors. This could lead to management having insufficient information or no information when they have to make decisions.
Single entry accounting system is highly prone to frauds and embezzlement. There is only one book of account rather than an elaborate accounting system. Hence, the internal checks are few. In fact they are non-existent. The person making the accounts could single handedly manipulate the books of accounts and misappropriate the resources of the firm.
To counter this problem, Luca Pacioli and other merchants of Venice created the double entry accounting system. This system proved to be very effective and useful and soon became the gold standard for the industry.
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An Overview of Contracts and Why They are Important to Business and Society
February 12, 2025
