Advantages And Disadvantages Of Double-Entry Bookkeeping

Advantages And Disadvantages Of Double-Entry Bookkeeping

You may have heard people in finance mention double-entry bookkeeping and wondered what the big deal is. 

This is a method of bookkeeping that has many advantages as well as disadvantages. 

Before deciding whether this is an option for your business, it would be a good idea to continue reading to learn more about what can be expected.


  • This method of bookkeeping makes it easier to create a balance sheet. Once the fiscal year is over it will make it simple for an accountant to look at the recorded figures and determine the financial position the business is in.
  • It makes it simple to compare one fiscal year to another, meaning it is easy to create tables showing the differences and making adjustments to ensure the highest profit can be made.
  • It is a proven scientific method, meaning the way that everything is calculated is not subjective at all. There are universal techniques and principles used to ensure that all of the checks and balances are carried out effectively.
  • Large businesses can really benefit from this type of bookkeeping. It can often be difficult to keep finances in order when a company is on the larger side. It eliminates a lot of the errors and issues that many people experience when trying to handle the financial records of larger businesses.
  • The accuracy is usually higher when using this method of record keeping. Since a trial balance is created using this system, this means that there will be no errors when it comes to calculating the business’ financial standing.


  • This is a very difficult method of bookkeeping to understand. It is not likely that someone who is less than professional can figure this out on their own. Therefore, you will have to invest in the service of a pro if you want this method to be used. 
  • There aren’t any benefits if the business you are keeping records for is small. Since there are not as many financial records to keep track of, it is not really necessary to use this particular method. 
  • More time will need to be invested in keeping books than usual. This means that it may be necessary to hire new people and/or pay for those who are skilled to work for more hours than usual. This is because every entry needs to be entered more than once and it has to be checked for accuracy. While this means a better handle on the finances, it does mean more work than before.
  • If an entry is omitted along the way, there is no automatic way for this to be detected. This means that everything that was entered after that will be erroneous. At the end of the accounting period, most of what was recorded will be wrong. It is much easier to spot a mistake when using basic accounting methods.
  • It costs more money to use this type of system, so businesses that are not doing very well financially may see this as an additional hit. It can be difficult to justify the expense when a company is already doing its best to sustain itself.

As you can see, there are pros and cons that are associated with double-entry bookkeeping. 

You should think carefully about how employing this method will affect your business. 

If you believe that it will make things more difficult, staying with your current system would probably be best. 

With that said, if you think there are likely to be more advantages than disadvantages then you should not hesitate to move forward with the method.



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