Single entry bookkeeping is simple, and is generally adopted by shop people and small concerns who deal in a great variety of articles and where the sales are small and numerous. This method affords some knowledge of the condition of the business to the proprietor; by this system it often seems a tedious method to enter each sum singly in the ledger. The ledger contains the names of all parties with whom transactions take place. The debtor and the creditor accounts of each party are arranged on the opposite pages, the debtor being on the left-hand side and the creditor on the right. Thus, if merchandise is sold to A, A is made debtor (Dr.) to merchandise and merchandise is made creditor (Cr.) to A. The key to bookkeeping is found in the following: Debit what is received or what costs value; credit what is parted with or what produces value. The person from whom you buy goods or receive money is the Creditor, and those to whom you sell goods on credit or pay money is the Debtor. When a thing is received its account is debited; when cash is received, cash is debited ; merchandise, merchandise is debited ; hence, when a person receives something of value from us without giving value in return we debit that person. When cash is paid out, cash is credited; merchandise is sold, merchandise is credited.
The cash book not only is very useful, but quite essential whether kept by single or double entry. When you receive money you enter it on the debtor's side or left-hand page; when you pay out money you enter the sum on the credit or right-hand page; the difference between two sides of a cash book will always show a debit balance which is equal to amount of cash on hand. The credit side of the account can never be larger (unless your account is overdrawn) than the debit side, since it is impossible to pay out more cash