| Different types of accounting systems are | | | | owner to know the amount he has amassed or |
| prevalent, and they help in maintaining business | | | | lost. The primary aim of any business is to earn |
| records. Of these, the cash system of accounting | | | | maximum profits by incurring minimum expenses. |
| records only cash receipts and payments. It | | | | Towards achieving this, an organization engaged in |
| follows the assumption that there exists zero | | | | business always tries to expand the business and |
| number of credit transactions. If at all some credit | | | | will strive to increase its sales while reducing the |
| transactions do happen, these are not recorded | | | | operating expenses. The progress made with |
| unless and until the cash is actually received or | | | | regard to this corresponds with properly |
| paid. To cite a few examples of this type of cash | | | | maintained financial documents and records. |
| system, the receipt and payment account of | | | | In the early times, the main goal of accounting |
| various entities such as clubs, societies, hospitals | | | | was to simply know the result of their business |
| and educational institutions fall under this category. | | | | activities, i.e. whether some profit has been made |
| The system of Single entry ignores the two-fold | | | | or any loss has been incurred. It would also show |
| aspect of transactions as considered in double | | | | the financial position of a business on a particular |
| entry system. In the single entry system, the | | | | day also. Apart from all these, accounting has to |
| personal aspects of transactions, in other words | | | | meet the various requirements of tax authorities, |
| the personal accounts, only are recorded. The | | | | investors, government rules and regulations, the |
| method simply ignores the impersonal aspects of | | | | management and share holders or owners. This |
| a transaction excluding the cash. It does not have | | | | aspect has widened the scope of accounting and |
| any safeguards regarding the accuracy of posting | | | | is rightly defined as the art of recording and |
| and is not at all safe from fraudulent practices | | | | classifying money transactions and events that |
| because it just overlooks any safety measures | | | | occur, and the interpretation of the results |
| that have to accompany the activity of recording | | | | there-of. |
| cash transactions. Due to this, it is considered an | | | | One is beset with the doubt whether accounting |
| imperfect accounting practice. | | | | can be termed as a Science. Accounting |
| The double entry system, on the other hand, with | | | | documents, in no way, establish a cause and |
| the passage of time, has gone through a number | | | | effect relationship. The fact is that it only provides |
| of developmental levels and stages. Double entry | | | | one with a procedure which when followed |
| system is the one and only method that fulfils all | | | | religiously will help in accomplishing the objectives |
| the essential objectives of a systematic | | | | of accounting. In that case, accounting is an art, |
| accounting process. It takes care of the two fold | | | | and not at all a science. And, the very art of |
| aspect of each business transaction. A system | | | | bookkeeping is as old as the art of trading and |
| that keeps accurate records of all the occurring | | | | commerce itself. |
| business transactions only will help the business | | | | |