Advantages and Limitations of the Double System in Accounting

len Alfred Ajibola - Fri, 03rd April, 2020 @ 09:40: AM

Topics in Accounts

Characteristics of Double Entry System Examples on the Principle of Double Entry System Advantages and Limitations of the Double System in Accounting Scheme of work, Financial Accounting, SS1, Third Term Scheme of work, Financial Accounting, SS1, Second Term Scheme of work, Financial Accounting, SS1, First Term Differences between Bookkeeping and Accounting Journal - Contents, Format, Characteristics and Advantages of Journal Bank Wire and Wire Transfer Chart of Accounts Meaning, Importance, Processes, Examples and Steps in Balance Sheet Reconciliations

Academic Questions in Accounts

Please check out our Test Your Knowledge page to see all Questions and Answers

With regards to bookkeeping and accounting, which of the following statement is incorrect?

  • A. Accounting covers the entire practice of finance management

  • B. Bookkeeping is a branch of accounting

  • C. Bookkeeping is a necessary requirement when making financial statement of account

  • D. Bookkeepers record financial transaction in a chronological order

  • E. Accountant earn higher salaries than bookkeepers

  • F. Accounting reports assist business managers in making a more detailed decision

The debited and credited accounts are written in which column of a journal?

  • A. Date

  • B. Particulars

  • C. Folio

  • D. Ledger

  • E. Amount

  • F. None of the above

A journal may also be referred to any of the following except _____.

  • A. Book of original entry

  • B. Book of primary entry

  • C. Book of first entry

  • D. Initial book

  • E. Day book

  • F. Chronological book

Which of the following statement is true concerning bank wire?

  • A. Another name for bank wire is cash transfer

  • B. The term 'wire' in bank wire signifies a computer based programmed message sent to a bank customer in regards to their account information, transaction and other important financial notifications

  • C. The International Bank Account Number (IBAN) must always be involved when carrying out a bank wire process

  • D. The term bank wire has no significant relationship with wire transfer

  • E. Cyber criminals cannot utilize bank wire threats like CSRS, phishing and whaling to achieve their fradulent act

  • F. All the above statements are true

The following are recommendations to follow during the process of balance sheet reconciliation EXCEPT _____.

  • A. All balance sheet accounts should be reconciled periodically, quarterly or annually

  • B. Comparing the trial balance of both the payables and receivables with the respective aging schedule

  • C. Analysis of enteries and relocating them to a sub-ledger if need be

  • D. Comparing the general ledger trial balance of the account to another source; for instance, a bank statement

  • E. Analysis of the differences in both accounts and making appropriate correction to ensure the correctness of entered information

  • F. None of the above



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Advantages of Double Entry System:

Understanding the processes of the double system in accounting is fundamental to every accounting student.

By definition, the double or dual system of accounting is one that shows recorded transactions at both sides (Debit - Dr.) and (credit - Cr.) of the entries with both having equal values.
Double Entry System - Len Academy

Please read more on the Debit and Credit sides of the Double Entry alongside their Characteristics here.

Through the records shown in a double entry, we can easily map out the direction of a business. In fact, the accountants or bookkeepers of a business will often record what goes in and out of the business in order to properly carry out their duty. This dual recordings done by accountants is exactly what the double system of accounting entails; and this must follow certain principles.

Please read on the Principles of Double Entry here.

Below are the advantages of the double system of accounting:

  1. There is completeness of account transactions.
    Please read on Balance Sheet Reconciliation here.

  2. It can be used to determine the profit or loss of a company.
    Please read on the Concept and Types of Cost here.

  3. It can be used to determine the number of assets and liability.
    Please read on the Concept of Business Studies here.

  4. It can be used to control a company’s expenditure.
    Please read on Business Structure (Sole Proprietorship), Its Advantages and Disadvantages here.

  5. It helps businesses to run smoothly by giving accurate information.
    Please read on Scale of Preference and Opportunity Cost here.

  6. It is not difficult to implement.

  7. It helps a business to understand the price of various commodities.
    Please read on the Elasticity of Supply here.

  8. It prevents account manipulation.

  9. It can be used as an accounting reference.


Limitations (Disadvantages) of Double Entry System

  1. Increased usage (and cost) of books of accounts.

  2. The accounting process can become complex.
    You can read on the Differences between Bookkeeping and Accounting here.

  3. Mistakes are possible (No one is above mistake).

  4. Recruitment and payment of a professional may be required.

  5. It can be time consuming.

You can read on examples on the Principle of Double Entry here.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.

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Amazing facts in Accounts

It is believed that Bookkeeping is the only English word to contain three sets of double letters repeatedly.

please read our article on bookkeeping vs Accounting here


A journal, also called book of original entry or book of primary entry or book of first entry or day book or chronological book is a book where daily transactions are recorded in a chronological order (the order of occurrence).

A journal contains the total record of all transactions made by a company. It can be distinguished into different types which will include:

  • Sales Journal: For recording inventory and sales.

  • Cash Receipts Journal: For recording money received from sales or cash inventory.

  • Purchase Journal: For recording all purchases made by a company.

  • General Journal and so on.


The content of a journal include the followings:

  1. The date when the transaction occurred.

  2. The description of the transaction.

  3. Debits

  4. Credits

  5. Accounts affected

Bank Wire is a messaging system that allows banks to communicate the various events occurring on a clients’ account.

As an instance, when your account is credited by someone, you may get a notification from your bank with details concerning such transaction.

Such notification(s) from the above instance is a function of bank wire

The term 'wire' in a bank wire signifies a computer based programmed messages that are sent to the bank customers regarding their account information, transactions and other important financial notifications. These messages are always secured and may be encrypted along the wire.

Please read more on bankwire and wire transfer here

Balance Sheet Reconciliations is a process of comparing the amounts on a balance sheet general ledger accounts to the details making up those balances, so that all their details agree or match.

Below are some recommendations to follow during Balance Sheet Reconciliations:

  1. All balance sheet accounts should be reconciled periodically, quarterly or annually so as to verify that all items have been accurately posted to the account.

  2. During the process of acount reconciliation, we will have to analyze the differences and make corrections so that the information is correct, complete and consistent on both accounts.

  3. With the balance sheet reconciliations, it is important to compare the trial balances of both payables and receivables with the respective aging schedule balances during reconciliation.

  4. In situations where the trial balance is more than the balance of the aging schedule, then it is likely that the entries are placed directly to the general ledger instead of the sub-ledger. One will need to analyze these entries and then relocate them to the sub-ledger.

  5. During balance sheet reconciliation, you compare the general ledger trial balance of the account to another source which could be internal; for instance, a sub-ledger or a bank statement.

Please read more on Balance Sheet Reconciliations here.