Page 29 - Book-keeping for Secondary Schools Student’s Book Form One

Basic principles of Book-keeping

a strong principle applied in the field of large entities with varieties of transactions
accounting. and high volume of trade.

Double entry system As businesses grow or become more
This is an accounting system whose complex, they often change from single-
FOR ONLINE READING ONLY
application promotes accuracy and entry system to double-entry system to
reliability in recording financial transactions. ensure better financial control and reporting.
It is used in maintaining systematic and
balanced records of an enterprise’s financial Example 2.2

transactions. Double entry system follows Let say you have a retail shop selling
th
the fundamental principle that every financial cereals. On 15 September 2023 you sold
transaction has dual effects on enterprise's 10 kilogrammes of rice for TZS 3,000 per
th
accounts. This means that for every debit kilogramme in cash. 18 September 2023
entry recorded, there must be an equal and paid TZS 50,000 as a transport cost for

corresponding credit entry. Double-entry goods purchased. In your single-entry book-
system provides a more comprehensive keeping system, you would record these
view of an enterprise's financial position. It transactions as cash inward and outward.

also allows for better analysis and facilitates You would enter the details as follows:
the preparation of more detailed financial
statements. Date Description Receipts Payment
(TZS) (TZS)
2023
Single entry system
Single entry system is sometimes called 15/09 10 30,000
kilogrammes
single entry Book-keeping. It is a simplified of rice.
Book-keeping method used by small @3,000
businesses or individuals to track their 18/09 Transport cost 50,000
financial transactions, primarily cash
transactions. This is different from double
entry system which follows the principle Characteristics of single entry system

of recording every transaction with at least These are few examples of characteristics
two entries. Single entry system makes a of single-entry system in the recording of
single entry for each transaction. Single- financial transactions:
entry Book-keeping may be simpler and (a) The level of accuracy on recording
more accessible for small businesses with financial transactions is different. Single-
straightforward financial transactions; the entry system does not maintain the same
system lacks capacity to deal with records of

21

Book Keeping Form 1 New 2024 FINAL.indd 21 18/10/2024 10:14