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Wednesday, April 27, 2011

Single Entry System

As we have already mentioned the concept of double entry system which includes two aspects i.e. debit and credit. But under single entry system, only records of cash and of personal account are maintained.It records only one aspect of every transaction, therefore, it is often called as an incomplete system of recording transactions. In single entry system, accounts relating debtors, creditor and cash are prepared. However, it ignores all impersonal accounts like salaries, wages, sale, purchases etc. In other words, it maintains a cash book and personal account but does not record nominal and real accounts. For example, if goods are purchased from a supplier on credit, his personal account is credited but no entry is made on the debit side of the goods account.

Features of single entry system
  1. It is maintains only accounts relating to person but ignores the real and nominal accounts.
  2. It also prepares the cash book but both personal or business cash transactions are recorded in same book.
  3. It is suitable to small traders having lesser number of transactions.
  4. It lacks the specific rules of maintaining books of accounts, as a result there is no uniformity in accounts of different firms.
  5. Trial balance cannot be prepared under this system.

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