What defines single entry bookkeeping?

Single entry bookkeeping is fundamentally characterized by its simplicity and focus. It primarily involves recording financial transactions in a straightforward manner, typically concentrating solely on income and expenses. This method does not provide a comprehensive view of a business's financial position, as it lacks the detailed double entry bookkeeping system where every transaction is recorded in both debit and credit formats.

In single entry systems, the essential aspect is that transactions are logged as they occur, giving a basic overview of cash inflows and outflows. This approach is often used by smaller businesses or individuals who do not require the complexity of tracking assets, liabilities, and equity comprehensively. By only looking at income and expenses, businesses using this method can easily monitor cash flow, but they may miss out on more detailed financial insights that a double entry system would provide.