Industrial & Management Engineering

Indian Institute of Technology, Kanpur

Assignment 12
MBA601A

Accounting and Finance

Group – 7
Submitted by:
Name: Harsh Roll No: 22125038
Group Members:
Harshit Jain 22125041
Nikhil Dubey 22125059
Rahul Balachandran 22125070

Date of submission: 11th September 2022

Accounting System
The systems of recording transactions in the book of accounts are called Accounting Systems.
They are classified into two classifications. Companies of all sizes use this system to record their
income, taxes, sales, payroll, etc. There are two types of accounting systems:

1. Single Entry Accounting System

2. Double entry Accounting System

Single Entry Accounting System

A single-entry accounting system records all financial transactions without keeping track of
assets and liabilities but cash. In a single entry system has the amount of the transaction, which
can be an expense or an income, the date, a brief explanation, and a balance that shows how
much money is on hand. The advantage of this accounting system is its simplicity and cost
effectiveness. This system can be used for small businesses with fewer transactions. However, it
does not capture enough data, and so cannot be used for generation of financial statements of
company, which is a limitation of single entry accounting system.

Double Entry Accounting System

Double entry system is based on principle that every transaction has two effect, debit in one
account and credit in other account. As a result, every transaction includes two or more
accounts and is recorded in several places across the ledger. Every debit must have a
corresponding credit. So, one account gets debited while the other is credited. This system is
ideal for all sizes and scales of business. It is complex as compared to the Single Entry
Accounting System but is more accurate and reliable.

Manual Accounting System and Computerized Accounting System

The accounting systems can also be classified as Manual Accounting system and Computerized
Accounting system.
Manual Accounting is the system where physical account books are recorded and maintained
by an accountant manually. This system is slow and less accurate. Efficiency in such system
depends on the skill of the accountant. Such system is generally used by small scale businesses.
Computerized Accounting is the system where accounting software is used for recording
financial transactions electronically. This system can be used be any size and scale of company.
This system is faster more accurate, reliable and easier to maintain. It allows better analysis of
data and can generate reports and statements quickly.

References
1. https://ncert.nic.in/textbook/pdf/keac102.pdf
2. https://commercelesson.in/difference-between-manual-accounting-and-computerised-
accounting/