SINGLE ENTRY SYSTEM
SINGLE ENTRY SYSTEM
We
have, so far, discussed Double Entry System; according to which, both the
aspects of a transaction are recorded. Another system of recording transactions
in the books of account is Single Entry System, under which both the aspects of
a transaction may not be recorded. Unlike Double Entry System, in Single Entry
System, no set rules are followed—even the books of account to be maintained
are not certain. Usually, under this system, the Cash Book and personal
accounts of debtors and creditors are maintained; real and nominal accounts are
not maintained at all. Since both the aspects of transactions are not recorded,
the system is known as Accounts from Incomplete Records or Single Entry System
of Accounting. Accounting records that are not maintained according to Double
Entry System are known as Accounts from Incomplete Records or Single Entry
System of Accounting.
Features of Single Entry System:
(i)
Suitability:
This system is suitable for small-size business where the number of transactions
is less.
(ii)
No
Uniformity: This system may differ from firm to firm as it is a mere
adjustment of Double Entry System according to requirements and convenience.
(iii)
Maintenance
of Personal Accounts: Usually under this system, only
personal accounts are maintained and real and nominal accounts are avoided.
Therefore sometimes, it is defined as a system where only personal accounts are
kept.
(iv)
Maintenance
of Cash Book: Generally, a Cash Book is maintained in this system which
mixes up business as well as private transactions.
(v)
Dependence
on Original Vouchers: Usually under this system,
original vouchers are scrutinized for collection of information. For example,
in case of credit sale, the owner may keep the invoice without recording it in
accounting books and at the end of a particular period the total of the
invoices gives credit sales of the business.
(vi)
Difficulty
in Preparation of Final Accounts: In the absence of all
nominal and real accounts in the ledger, final accounts cannot be prepared
easily.
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