Question

How would commerce be different without a double-entry system?

Answer 1

Double entry system is one of the business innovations. Without double entry system, commerce would have been highly impossible. Under the double entry system, each and every transaction is recorded twice in the accounting records.

If there was no double entry system, commerce would have been affected in the following way.

1. There would have been lot of bookeeping errors as there were no proper checks in place.

2. There was no convinient way to create an income statement or balance sheet

3. It would have been very difficult to rationalise commercial transactions

4. Trade would have become inefficient

5. Merchants and bankers would not be able to make out their costs and profits