Double entry bookkeeping disadvantages – Double entry bookkeeping is best way to track all your transactions. It have some serious disadvantages too. Let we see these disadvantages on this article. Basically double entry accounting is familiar in almost all accounting firms.
Double Entry Bookkeeping Disadvantages
The following are the disadvantages of Double entry accounting
1. It is not suitable to disclose all the information of a transaction which is not properly recorded in the journal.
2. If there are any errors in the transactions recorded in the books, it is difficult to detecting the errors.
3. Double entry bookkeeping required more skilled person.
4. If there are any compensatory errors, it is not suitable to find out by this system.
5. More complex and time consuming than cash account.
7. Next important disadvantage is This system requires following uniform accounting policies in preparing financial statements, due this principle many business enterprise do not wish share their own policy.
8. Many of the traditional tax adjustments methods used in cash accounting (e.g. purchasing inputs in the previous year, delayed payment of grain sales, cannot be used).
9. Double entry accounting requires a number of books to be maintained as compared to the single entry system of book keeping.
10. It requires skilled or specialist knowledge person is needed to perform double-entry accounting system.
11. Another one disadvantages of this system is, The system does not disclose all the errors committed in the books accounts.
12. The trial balance prepared under this system does not disclose certain types of errors.
13. Books of accounts and other records are more under this system and more expensive.
14. If the work is more than normal situation it may require hired external staff to complete, it will take more time to finish the work.
15. Under the rules and policies as per generally accepted accounting principles, in view of this structure an accountant process accounting work within the set of rules and cannot avoid it unless it is not accepted by the shareholders, other interested persons, and department authorities.
16. There is no guarantee that no errors have been made.
For example – the wrong ledger account balance may have been debited or credited, or the entries posted wrongly or reversed.
17. Next disadvantage of double entry bookkeeping is, In case of small business entity, it should be prepare and present financial statement with strict policies but the entity has only if few type of activities, hence it requires more time and cost also, so far as the small business concern feels it is too more work.
18. It is a bit of more time consuming work, not least because by its definition, every transaction is entered twice.
19. There should be design proper and suitable accounting system with necessary regulations and policies as per the business entity and hence that it requires qualified person for organizing accounting system thereby take time for design and professional charges, in view of system cannot easily implemented.
20. In case of corporate form of business enterprise it should be prepare accounts as per this system unless it will be levied penalty as per law.
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Originally posted 2013-11-06 09:57:10.