Kinds of Accounting System Used in Nepal

1. Wasil Banki Srestha Pranali: This is a simple book or statement of recording of government revenue and expenditure. It was suitable to those offices which were established for short period or which had a small number of financial transactions. It was based on single entry system where the revenues were recorded on one side of the page and expenditures on the other side. Therefore, it was easy to find the total amount of expenditures and incomes. Under this system, books are closed either at the end of the fiscal year or at the completion of work. This system was failed to analyze the transactions into a number of heads.
2. Shyaha Srestha Pranali: In the historical development of accounting in Nepal, Shyaha Sresta Pranali is an important system, which was found by Kharidar Gunawanta in about 1936 B.S. It was more systematic than Wasil Banki System. Under this system, both expenditures and revenues could be recorded on the same leaf and their total and balances also could be shown on the same leaf when required.
   

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.
   

Preparation of Balance Sheet

balance sheet of a non-trading organization is prepared in the same manner as the balance sheet of a business concern by showing assets on the right hand side and liabilities on the left hand side. It is prepared on the basis of last year's balance sheet, receipts and payment account, stock register kept for assets and the income and expenditure account. The following points should be noted while preparing balance sheet.

• Capital Fund: The capital fund represent the excess amount of assets over the liabilities. It is determined by preparing opening balance sheet at the beginning of the year.
• Surplus or Deficit: The surplus amount taken from income and expenditure account is added to the capital fund while preparing balance sheet at the end of yea. On the other hand, the amount of deficit is deducted from capital fund.
• Cash and Bank Balance: The closing balances of cash and bank are shown on the assets side of balance sheet. However, opening balances are ignored.
• Assets: Assets of opening balance sheet or last year are shown on the assets side of closing balance sheet. If there is any addition in current yea, it must be added and in case of sale, it is deducted. The depreciation made during the year is also adjusted in fixed assets.
• New Assets: In case of purchase of any new assets, it is required to show on the assets side of balance sheet.
• Liabilities: Outstanding expenses, advance income etc. are shown on the liability side of balance sheet. Previous year's liability should be adjusted for payments made.
• Special Receipts: Special receipts are shown in balance sheet after making necessary adjustments.
  

Preparation of Income and Expenditure Account

Income and expenditure account is prepared on the basis of receipt and payments account or trial balance. The following steps are followed to prepare an income and expenditure account from a receipts and payments account.

1. Ignore the opening and closing balance of cash in hand and at bank available in the receipts and payments account. The closing balance of cash and bank will be shown in the balance sheet.
2. Take only the revenue receipts and revenue payments and do not include the portions to previous and subsequent years.
3. Ignore all the capital receipts and capital expenditures.
4. Add the amount of incomes pre-received in the previous year on account of current year.
5. Add the amount of incomes of the current year but due to receive.
6. Add the amount of expenses prepaid in the previous year on account of current year.
7. Add the amount of expenses of current year but still outstanding to pay.
8. Make necessary adjustments as per the need of additional information given in question like depreciation on fixed assets, reserve for doubtful debts, loss or profit on sale of fixed assets etc.
9. Determine the amount of surplus or deficit. 'Surplus' arises when credit side of income and expenditure account is bigger. On the other hand, 'Deficit' arises in case of excess of expenses over incomes.