Categories: Double Entry Accounting

Disadvantages of Double Entry System | Harmful for accounts

How can you prevent or minimize your double entry error into accounts?

Every system has its own advantage and disadvantage of double entry system normally there was no exception from that situations. Every company tries to the proper recording system of every book of accounts such as assets, liabilities, revenue, and capital accordingly.

Disadvantages of double entry system are not the negative sense for the practical use of businesses it is only for students and professionals to known. This is no fault of an inventor of double entry accounting named Luca Pacioli. Limitation of double entry system is actually created by manmade which is responsible for accounting clerical work.

Disadvantages of double entry system of accounting:

In a small business, some small enterprise uses double-entry software of double-entry personal finance software but software is not a final solution for an organization because a person control software if he could input wrong or error entry than the accounts cannot be flawless. this is the basics double entry characteristics of accounting system We can discuss the limitation of double entry is as follows;

  1. Not supported by a small business:

In small businesses, businessman maintains simple accounting books such as revenue and expenses and after the end of the month or year, he/she calculate profit and loss based on expense and revenue voucher in daily transactions. On the other hand, double entry accounting system needs to maintain many books which are not suitable for small business.

  1. Costly maintenance:

Though double entry system maintains separate books of accounts for every transaction that’s why the employer wants to hire a bookkeeper or accountant for track these books for preparing the financial statement.

  1. Complicated system:

In this system of accounts maintenance of owner of the company should be knowledgeable about accounting or bookkeeping. If the owner of the business does not know about double entry system then profit and loss accounts are not properly calculated. In this case business owner hire an accountant and the process will be complicated as well.

  1. Difficult for corrective actions:

Generally, most of the time we made the transactions in the last day of accounting year and it will effect for next accounting year as well but the transactions are recorded or adjusted in final accounts during the accounting years. These types of transactions are more difficult to adjust if you could not track the transactions.

  1. Failure to disclose some error:

In double entry system we can prove our accounts books of the transaction in trial balance but sometimes the whole transactions were deleted or may be transaction omitted this kind of error detects time-consuming in double entry system.

Double entry bookkeeping system is so simple and easy to understand. Similarly, there is no limitation of double entry system in bookkeeping. I have written following five points against double entry system. In writing this, I am not criticizing great accounting or bookkeeping system of the world but the following points are the only limitation from small businesses or student of accounting.

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