What is the difference between Single Entry and Double Entry Accounting?
I’m sure you have heard these terms somewhere in your business career and have no idea what the difference is. What do Single Entry and Double Entry ever mean?
Single entry accounting keeps track of your business expenses on a spreadsheet or list. We take your bank and credit card statement and create a list of expenses with the date, amount, and type of expense. We also track your income in the same excel workbook. This process will make a Profit and Loss Statement but no Balance Sheet. The spreadsheet method of accounting can be used for straightforward businesses or side hustles with very little activity. You do not want to hand type in all your transactions each month to a spreadsheet if it’s going to take a long time. If you have more than 20-30 transactions a month, I recommend upgrading to an accounting system.
Double Entry accounting is where every transaction has two sides; one debit and one credit. This is best done in accounting software like QuickBooks Online. When banking transactions are posted, all the reporting needed for taxes will be automatically created through this system. Double Entry accounting satisfies the accounting equation – Assets = Liabilities + Equity. There are five groups of general ledger accounts your transactions will post to: Asset, Liability, Equity, Revenue, and Expense. The balance sheet consists of Assets, Liabilities, and Equity. Profit and Loss Statements list Revenues minus Expenses.
If you want to learn more about this topic or need a copy of my Single Entry Excel spreadsheet, please email me at Nicolea.email@example.com. Or schedule a zoom with me at https://calendly.com/excelbook.