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Bulletin HASKINS & SELLS 63 ONE can scarcely imagine credence being given in these swift days of advanced ideas to the thought that the principles of single-entry bookkeeping have any practical value. As a system of bookkeeping it is rarely found; although occasionally a public accountant in attempting to take off a trial balance awakes suddenly, when the two sides fail to agree, to the fact that he has actually encountered what he thought was a matter of history. Once discovered by the accountant, he makes so much fuss about the single-entry system that the client is usually put to shame and the installation of a system of double-entry follows. Textbooks and practice sets used for instruction rarely fail to introduce the subject of single-entry, and occasionally the principal purpose thereof is to show the transition from single- to double-entry. But even this has little practical value since the system is now so seldom used. As originally conceived and used, it probably embraced four accounts: cash, accounts receivable, accounts payable, and proprietorship. Profits were determined by the asset and liability method, which consisted in supplementing the accounts on the books by such assets or liabilities as might be determined through inventories, establishing the net worth and comparing the proprietorship at two dates, taking into consideration additions to or withdrawals from the capital during the interim. Single-entry today probably has no practical value of any importance; but the asset and liability method of determining profits, which presumably was an outgrowth of the single-entry system, is frequently useful. This is particularly true in cases where it is necessary to approximate results quickly. A practical example of such use occurred on one occasion when a client wished to know how the result, from a financial point of view, of analyzing an account running over several years would compare with the expense of the work involved. Instead of the somewhat usual reply that it would be impossible to make such comparison in advance of the completion of the work, the client was advised within twenty-four hours that the result would show approximately $225,000 of profit to which he would be entitled; that the expense of analyzing the account would probably not exceed $3,000. The facts surrounding the case were as follows: On a certain date an account with a stock broker was opened with various securities received into the account. The books under examination were those of the broker showing the account with his customer. From time to time other securities were received in, and delivered out; checks for cash received and for cash paid appeared on the respective sides of the account; interest was both charged and credited. The account ran through several ledgers, in and out of the regular and various special accounts, and was closed finally by the Is Single-entry Obsolete?
Is single entry obsolete?
Single entry bookkeeping
Haskins & Sells Bulletin, Vol. 05, no. 08 (1922 August 15), p. 63-64
|Source||Originally published by: Haskins & Sells|
|Collection||Deloitte Digital Collection|
|Digital Publisher||University of Mississippi Libraries. Accounting Collection|
|Identifier||HS Bulletin 5-p63|