Triple entry accounting system is a new form of bookkeeping that emerged as an alternative to double-entry system. The triple entry system works by the logging of three entries during a transaction. The credit entry, debit entry, and an additional entry of receipt. The third entry assures credibility to the transaction thereby securing the financial operations. 

The advent of digital record keeping has necessitated proof of work due to its easy data tampering vulnerability. While double entry system allows the parties to record entries separately in the ledger, the triple entry system introduces a common ledger between the parties. This creates transparency in the transactions, vouch for reliability, and enhances trust between the participants. 

Let’s see how triple entry system secure your business by introducing a receipt. Before that look at the working of double entry system and it’s faulty nature. 

Working of Double Entry System 

Let us consider a payment transaction between Alice and Bob 

Bob gives a payment of $100 to Alice. Both of them record the entries in their separate ledgers as below. Bob records in his books the debited amount of $100 in Alice’s account. At the same time, Alice records the credited amount of $100 in Bob’s account to her books.

While returning the money, Alice debit Bob’s account as $100, and the closing balance becomes $0. Simultaneously, after receiving the money, Bob records the credit amount of $100 in Alice’s account. This makes the closing balance of Bob’s book $0 and the account is closed. 

This is an ideal scenario during a transaction in a double entry system. Though, the double entry system is more prone to errors, loopholes and fraudulent activities. Let’s look at the same scenario but with a common flaw that happens with double entry system. 

Error in Double Entry System 

Here, while giving the money, Bob records $100 correctly in his books while Alice misses a zero and enter it as $10. Now, during the repayment, Alice gives $10 and closes Bob’s Account. However, as Bob received only $10 instead of $100, Alice’s Account in Bob’s book will still show a remaining balance of $90.  

This is one of the common errors that happen in a double entry system. Here, a minor error or deliberate tampering of the record could result in a mishap in the ledgers. Records also can be fairly easily falsified under a double-entry system.

Discrepancies may be found eventually through painstaking auditing, but the process is difficult, time-consuming, and far from foolproof. This also leads to distrust between the parties and results in hostile relations. 

The reason of these errors is that the ledgers are recorded independently by the parties. Here arises the necessity of a common ledger through which any error or discrepancy can be found out and resolved easily. This is when we introduce a receipt between the parties. This element of receipt or proof of work converts the double entry system to the triple entry system.  

SimpleAccounts’ blockchain enabled triple entry system ensures secure and efficient business financing.

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lockchain is one of the most looked forward technology in today’s digital world. The tech world finds immense potential for this amazing technology to disrupt finance, supply chain, real estate, and many other industry sectors. 

Blockchain is a digital record-keeping system that records and distributes assets in different places at the same time. Blockchain can only be updated by consensus between users in the system, and once new data is recorded it can never be removed.  

As accounting demands for reliable distribution of ledger, blockchain becomes the mechanism for achieving the same. In blockchain, data is cryptographically stored and shared through systems; it promises high-level security without being handed over to a third-party. Blockchain also enable users to keep track of their activity or data and detect frauds. This service saves your money by disabling third-party interference, keeping track of your data, giving better data analytics, and more. 

Simply put, blockchain and accounting is a perfect mix to bring effective financial operations. Now being in the incubation period, unleashing the full potential of blockchain can revamp the accounting management in the upcoming years. Here we introduce some accounting software that incorporate blockchain technology for a secure, transparent and immutable financial operations. 

SimpleAccounts

SimpleAccounts is an all-in-one accounting software with advanced features catering SMEs and accountants. SimpleAccounts is introducing an efficient blockchain feature that helps you to run a hassle-free business by managing your books incredibly. It enables you to make efficient forecasting with their elementary reports and statements absolutely free. 

Secure, consistent, real-time – this blockchain enabled triple-entry accounting software has an edge over other accounting systems. SimpleAccounts’ blockchain based technology allows for developing an immutable accounting ledger and automated account auditing using a triple-entry accounting system, assuring every transaction is immutable, tracked, and verified.  

Integrating SimpleAccounts’ service to your business can bring manifold benefits to your business. With its reliable bank-reconciliation feature, sync your bank account with the SimpleAccounts for an error-free, fast and accurate financial statements. The blockchain enabled accounting software detects frauds, tracks receivables and manage transactions to make your business good-standing. 

SimpleAccounts is the one-stop solution for all your accounting related problems. We streamline your invoices, VAT reports, and cash flow with the most secure blockchain technology. Get insights into your business status anytime, anywhere in a glance through our proficiently designed dashboard. 

SARA Technologies

SARA Technologies offers the most accessible and most efficient blockchain accounting software to manage your organization accounts and ledgers, without the risk of data tampering. They have satisfied a massive range of business accounting needs by their highly secured and technically superior accounting based on blockchain technology.  

SARA Technologies offers the most accessible and most efficient blockchain accounting software to manage your organization accounts and ledgers, without the risk of data tampering. They have satisfied a massive range of business accounting needs by their highly secured and technically superior accounting based on blockchain technology.  

The integration of blockchain into the accounting system free-up the businesses from the headaches of maintaining separate records as per the transaction receipts. Organizations can record their transactions right into a decentralized ledger, forming an interlocking arrangement of abiding accounts and records. 

The team of blockchain professionals here have helped a vast number of clients with the accounting software development services and assisted them to establish a highly secured accounting system using blockchain technology. 

As a blockchain software developer, it understands the importance of accounting transactions, and financial records for your business thus offer smooth audit services as well.

Triple entry accounting system is a new form of bookkeeping that emerged as an alternative to double entry system.

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he origin of accounting traces back to the ancient Mesopotamian civilization. It was mostly used to record the growth of crops and herds. Since then, accounting has evolved into several nuances of auditing and bookkeeping. Industrial revolution to the digital revolution, accounting has witnessed different forms and systems. Lately stepping into the triple entry system, a whole new transformation of accounting is in the making. 

Before diving into triple-entry accounting, let’s understand what single-entry accounting and double-entry accounting is. 

Skip to Triple entry accounting if you are not a fan of backstories.

Single entry system 

A single-entry system is a method of accounting where each financial transaction is entered only once. It is called single entry system as the transaction  is done as a single entry in journal. Here, it mostly records the cash inflow and outflow of a company in the record book. It is like having your own personal checkbook. Single entry system works only if the business is small or simple. 

Double entry system 

In Double entry, the transactions are recorded as an effect of two financial events – amount entered as debit and amount entered as credit, otherwise called as liabilities and assets. Most of the businesses follow double entry system for its accuracy and error-free conduct. 

Having an existing practice of accounting systems like single entry and double entry, what was the need for a triple entry system? how does it become the gamechanger in accounting? 

Triple entry accounting is as fascinating as it sounds due to its connection with blockchain technology. Now, let’s dig deeper into triple entry system and the role of blockchain in it. 

Triple entry accounting system is a new form of bookkeeping that emerged as an alternative to double entry system. The triple entry system works by the documentation of three entries. The credit entry, debit entry, and an additional entry of receipt.  

The credit and debit entries occur as in the double entry system. The feature that makes triple entry stand out from the traditional accounting system is the third entry, a receipt. This receipt is an audit that is cryptographically verified by the network that ensures security. 

These entries include purchase of supplies and products, sales, expenses, and taxes. In fact, every penny spent and taken goes into the entry. This receipt is advocated by blockchain technology, the decentralized way of operations. 

Blockchain is a digital record or public ledger of transactions which is distributed among the network to ensure security and ease of access worldwide. 

Easily explained: 

To explain this more illustratively, consider a situation where a person sells an item. The seller records a debit in his account for the money gain while the buyer records credit for the amount spent. Two different occurrences are performed and filed in separate accounting records in the same transaction. This is where the double-entry stops at.  

Here is when blockchain technology comes into role. The triple entry system takes it from there by introducing a public ledger. These separate accounting records are now filed in a single distributed, public ledger. It creates an interconnection between them making a transfer between two wallet addresses. All entries are cryptographically secured and distributed in the network. Thus, it is credible, encrypted, and not falsifiable.  

How does Blockchain become a part of triple entry system?

Rather than including blockchain as an element in this system, it’s better to say that, the advent of blockchain triggered to develop an alternative accounting system.  The necessity for a trusted and neutral third party to audit the business system was inevitable. The emergence of bitcoin backed by blockchain technology thus came as a solution for this shortcoming. This third public ledger is decentralized, secure, automated, and immutable using blockchain protocol.     

Hence, triple entry system can be accounted as a double entry system with a cryptographically locked method enabled by blockchain. This opens to a more secure, reliable, and tamperproof way of accounting.  

Click here to learn more about Blockchain technology and it’s advantages in accounting.