The upcoming discussion will update you about the difference between double entry system and double account system.
Difference # Double Entry System:
1. Annual Account consists of:
(a) Profit and Loss Account
(b) Profit and Loss Appropriation A/c
(c) Balance Sheet
2. Record of fixed assets and fixed liabilities is kept in Balance Sheet.
3. Amount of depreciation is shown as deduction from concerned asset in Balance Sheet.
4. Interest is taken to Profit and Loss A/c.
5. The object of preparing Balance Sheet is to disclose the financial position of the business on a particular day.
6. There is one Balance Sheet in the form of a statement of assets and liabilities (single account system).
Difference # Double Account System:
1. Annual Accounts consist of:
(a) Revenue Account
(b) Net Revenue Account
(c) Receipts and Expenditure on Capital A/c
(d) General Balance Sheet
2. Record of fixed assets and fixed liabilities is kept in Capital Account.
3. The fixed assets are shown at cost in the Capital Account and the amount of depreciation fund is shown in Balance Sheet.
4. Interest is taken to Net Revenue Account.
5. The object of preparing Balance Sheet in two parts is to give details regarding the amount of fixed capital raised and its utilisation towards purchase of fixed assets.
6. The Balance Sheet is prepared and presented in two parts, i.e., Capital Account and General Balance Sheet.