Single Entry System

Subject: Other

Find Your Query

Overview

Single entry system is the system, which does not record two aspects or accounts of all financial transactions. This note has information about the single entry system.
Single Entry System
.

A single entry system is an incomplete form of recording financial transactions. It is the system, which does not record two aspects or accounts of all financial transactions. It is the system, which has no fixed set of rules to record the financial transactions of the business. It records only one aspect of a transaction. It mainly maintains cash book and personal accounts of debtors and creditors but ignores real and nominal accounts except cash account.

The following are the main definitions of single entry system:

"Single entry system is a system of book-keeping in which, as a rule, the records of only cash and personal accounts are maintained. It is always incomplete double entry system varying with circumstances." -R.N. Carter

"It is incomplete, inaccurate, unscientific and unsystematic style of account keeping." -Choksi

Nepal's Largest Virtual Event Abroad Studies Opportunities

From the above definition, it is clear that the system in which the financial transactions are not recorded by affecting their two aspects or accounts completely is called single-entry system of recording transactions.

Features

The following are the main features of single entry system:

  1. No fixed rules
    This system is not guided by fixed set of accounting rules for determining the amount of profit and preparing the financial statements.

  2. Incomplete system
    It is an incomplete system of accounting, which does not record all the aspects of financial transactions of the business. It only maintains cash account and personal accounts of debtors and creditors.

  3. Cash book
    It maintains cash book for recording cash receipts and payments of the business organization during a given period of time.

  4. Personal accounts
    It maintains personal accounts of all the debtors and creditors for determining the amount of credit sales and purchases during a given period of time.

  5. Variations in application
    Single entry system has no fixed set of principles for recording financial transactions and preparing different financial statements. Hence, it has variations in its application from one business to another.

Advantages

The following are the important advantages of single entry system:

  1. Simple and easy
    Single entry system is simple to understand and easy to maintain as it has no fixed set of principles to follow while recording financial transactions.
  2. Economy
    Single entry system is an economical system of recording financial transactions. It does not require hiring skilled accounting personnel to record financial transactions of the business.
  3. Easy to calculate profit
    Under this system, the amount of profit can be determined easily. The amount of profit or loss of the period can be determined by making a comparison between the amounts of closing capital and opening capital.
  4. Suitable for small businesses
    The single-entry system is a simple, easy, and economical system. It is suitable for small businesses because they cannot afford the cost of double entry system.

Disadvantages

The following are the notable disadvantages of single entry system:

  1. Unscientific and unsystematic
    The single-entry system is an unsystematic and unscientific system of recording financial transactions. It does not have any set of fixed rules and principles for recording and reporting the financial transactions.
  2. Incomplete system
    It is an incomplete system because does not record the two aspects or accounts of the financial transactions of the business. It does not maintain any record of the transactions relating to nominal and real account accept cash account.
  3. Lack of arithmetical accuracy
    It is not based not the principles of debit and credit. It fails to provide the arithmetical accuracy of the books of accounts. A trial balance cannot be prepared under this system to check the arithmetical accuracy of books of accounts.
  4. Does not reflect true profit or loss
    The true amount of profit or loss of the business cannot be ascertained under this system because it does not maintain the nominal accounts. It determines the amount of profit or loss by making a comparison between the amount of closing capital and opening capital.
Things to remember
  • Single entry system is the system, which does not record two aspects or accounts of all financial transactions. 
  • Single entry system system is not guided by fixed set of accounting rules for determining the amount of profit and preparing the financial statements.
  • Single entry system is an economical system of recording financial transactions.

 

  • It includes every relationship which established among the people.
  • There can be more than one community in a society. Community smaller than society.
  • It is a network of social relationships which cannot see or touched.
  • common interests and common objectives are not necessary for society.
Videos for Single Entry System
Single Entry System
Single entry system
Questions and Answers

A single entry system is an incomplete form of recording financial transactions. It is the system, which does not record two aspects or accounts of all financial transactions. It is the system, which has no fixed set of rules to record the financial transactions of the business.

The following are the features of single entry system:

  1. This system is not guided by fixed set of accounting rules for determining the amount of profit and preparing the financial statements.
  2. It is an incomplete system of accounting, which does not record all the aspects of financial transactions of the business.
  3. It maintains cash book for recording cash receipts and payments of the business organization during a given period of time.
  4. It maintains personal accounts of all the debtors and creditors for determining the amount of credit sales and purchases during a given period of time.
  5. Single entry system has no fixed set of principles for recording financial transactions and preparing different financial statements.

The following are the advantages of single entry system:

  1. Simple and easy
    Single entry system is simple to understand and easy to maintain as it has no fixed set of principles to follow while recording financial transactions.
  2. Economy
    Single entry system is an economical system of recording financial transactions. It does not require hiring skilled accounting personnel to record financial transactions of the business.
  3. Easy to calculate profit
    Under this system, the amount of profit can be determined easily. The amount of profit or loss of the period can be determined by making a comparison between the amounts of closing capital and opening capital.
  4. Suitable for small businesses
    The single-entry system is a simple, easy, and economical system. It is suitable for small businesses because they cannot afford the cost of double entry system.

The following are the notable disadvantages of single entry system:

  1. Unscientific and unsystematic
    The single-entry system is an unsystematic and unscientific system of recording financial transactions. It does not have any set of fixed rules and principles for recording and reporting the financial transactions.
  2. Incomplete system
    It is an incomplete system because does not record the two aspects or accounts of the financial transactions of the business. It does not maintain any record of the transactions relating to nominal and real account accept cash account.
  3. Lack of arithmetical accuracy
    It is not based not the principles of debit and credit. It fails to provide the arithmetical accuracy of the books of accounts. A trial balance cannot be prepared under this system to check the arithmetical accuracy of books of accounts.
  4. Does not reflect true profit or loss
    The true amount of profit or loss of the business cannot be ascertained under this system because it does not maintain the nominal accounts. It determines the amount of profit or loss by making a comparison between the amount of closing capital and opening capital.
Quiz

© 2019-20 Kullabs. All Rights Reserved.