Single Entry System
Q.N.1. Define Single entry? What are
its characteristics? What are its various types?
Ans. Single entry system:
- It is defined as the method of accounting which does not follow the principle
of double entry system .Under this method only one account is given debit or
credit for each transaction. Under this method, only personal accounts are
maintained and impersonal account may not be maintained in the books.
Characteristics
of Single Entry System:-
(1)
This system is a mixture of (i) double entry (ii) Single entry and
(iii) no entry.
(2)
This system is suitable for small business.
(3)
In this system, generally personal Account are kept but real and
Normal Account are ignored.
(4)
In the absence of record of the two-fold aspect of every
transaction, it is not possible to prepare a trial balance and check the
arithmetical accuracy of the books of account.
(5)
Under this system the profit or loss can be found out but its
composition will not be available.
The
single Entry System can be classified into following three categories:-
(1)
Pure
Single Entry System:-Under this type of Single entry,
the dual aspect of each transaction is ignored. Only personal account of debtors and creditors are kept but no record is
kept for Real or Nominal Account.
(2)
Simple
Single Entry System:-Under this system, (i) Personal
Account and (ii) Cash book are kept.
(3)
Quasi
Single Entry System:-Under this System, (i) Personal
Account, (ii) Cash book and (iii) Some other subsidiary books are kept.
Q, N. 2. What are the merits and
demerits of Single Entry System?
Ans. Merits
of Single Entry System:-
(1) It is an easy and simple
method of maintaining books of accounts.
(2) It is conventional and
economical.
(3) It is less time consuming.
Demerits of Single Entry System:-
(1)It is not a scientific method
of accounting because it does not record the two-fold aspect of each
transaction.
(2)No trial balance can be
prepared under Single Entry System.
(3)The arithmetical accuracy of
the books cannot be checked in the absence of trial balance.
(4)In the absence of various
checks, Fraud is more easily committed and it is very difficult to detect.
(5)In the absence of Real and
nominal accounts the true financial position of the business cannot be
ascertained.
Q.N.3. Distinguish between
(a)
Single Entry and Double Entry System.
(b)
Statement of affairs and Balance Sheet
Ans. (a) Difference between Double Entry System and
Single Entry System
|
S.N. |
Double Entry System |
Single Entry System |
|
1. |
Under
this system, both aspect of each transaction are record. |
Under
this system, both aspect of each transaction are not recorded. |
|
2. |
In
this system, Personal, Real and Nominal accounts are kept fully. |
In
this system, only Personal Accounts are kept and Real and Nominal Accounts
are ignored. |
|
3. |
In
this system, Cash book, General ledger, Debtors’ Ledger and Creditors’ Ledger
are maintained. |
In
this system, only Debtors’ Ledger and creditors’ Ledger are kept. Cash book
is also kept but personal transaction gets mixed up with business
transaction. |
|
4. |
Under
this system, arithmetical accuracy can be checked by preparing Trial Balance
at any moment of time. |
Under
this system, arithmetical accuracy cannot be checked because to Trial Balance
can be prepared. |
|
5. |
In
this system, Trading, Profit and Loss Accounts and balance sheet can be
prepared. |
In
this system, Trading, Profit And Loss Accounts and Balance sheet cannot be
prepared. |
|
6. |
For
interpretation of financial statement, we can compute different ratios, if
the accounts are maintained under this system. |
Vital
ratios cannot be computed, if the accounts are maintained under this system. |
|
7. |
This
system is scientific and follows certain rules. |
This
system is unscientific and does not follow any concrete rules. |