suggestions for single entry system
Answers
Explanation:
Meaning Of Single Entry System
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 the financial transactions. It is the system, which has no fixed set of rules to record the financial transactions of the business. Single entry system records only one aspect of transaction. Thus, single entry system is not a proper system of recording financial transactions, which fails to present complete information required by the management. Single entry system mainly maintains cash book and personal accounts of debtors and creditors. Single entry system ignores nominal account and real account except cash account. Hence, it is incomplete form of double entry system, which fails to disclose true profit or loss and financial position of a business organization.
Features Of Single Entry System
The following are the main features of single entry system:
1. No Fixed Rules
Single entry system is not guided by fixed set of accounting rules for determining the amount of profit and preparing the financial statements.
2. Incomplete System
Single entry system is an incomplete system of accounting, which does not record all the aspects of financial transactions of the business.
3. Cash Book
Single entry system maintains cash book for recording cash receipts and payments of the business organization during a given period of time.
4. Personal Account
Single entry system maintains personal accounts of all the debtors and creditors for determining the amount of credit sales and credit 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.
