In accounting terms, there are two types of systems as single account system and double account system to record the accounts. The basic difference can be termed as, in single account system only one balance sheet is prepared whereas in the case of double account system two balance sheet are prepared as capital account and general balance sheet.
In this article, we will know the difference between the single account system and double account system.
Single account system:
Only one Balance Sheet is available. It includes the liabilities and assets. The aim is to demonstrate a company’s financial position at a given time.
Depreciation is deducted on the balance sheet from the respective assets. The profit and loss account and profit and loss appropriation account is other equal account.
Double account system:
A double account system is a method of presentation of final accounts of public utility undertakings like railways, gas, water supply, etc. These public utility undertakings are usually run by the government or local authorities with some exceptions like electric supply companies or tramways.
- Revenue account and net revenue account are prepared instead of profit and loss account and profit and loss appropriation account.
- Normally, no adjustment of assets is made in the capital account.
- Discounts and premiums are permanently treated as capital items.
- Loan capital (debentures) shares and stocks are treated as capital items.
- Interest on loans and debentures are to be charged against the net revenue account.
The final accounts prepared under double account system consists of
- Revenue account
- Net revenue account
- Capital account
- General balance sheet
Difference between Single account system and Double account system
|Single account system||Double account system|
|Preparation of balance sheet|
|Under a single account system, only one balance sheet is prepared in its usual form showing the assets and liabilities of the business||Under double account system balance sheet is prepared and presented in two parts. Capital account General balance sheet|
|The main purpose of preparing the balance sheet, under a single account system is to know the financial position of the business concern on a particular date.||The main purpose of preparing the balance sheet under the double account system is to show the amount of capital received and how the same has been invested in fixed assets.|
|Presentation of fixed assets|
|Under a single account system, fixed assets are shown in the balance sheet after the deduction of depreciation.||Under the double account system, fixed assets are shown at a cost in the capital account, and the depreciation fund created for charging depreciation is shown on the liabilities side of the general balance sheet.|
|Title to the income statement|
|Under a single account system, an income statement is prepared in two parts namely profit and loss account and profit and loss appropriation account||Under double account system, an income statement is prepared in two parts titled revenue account and net revenue account|
Bottom line :
As a result of the preceding discussion, the difference between single account system and double account system can be told in a sentence as, The purpose of the single account system is to show the financial position of a company at a specific date, while the purpose is to demonstrate the amount of capital received and the application in the fixed capital under the double account system. The double account system is to indicate a certain amount of capital received.