Question

why is single entry system is not preferred by the entrepreneurs?​

Answer 1

Answer:

Limitations of Incomplete Records

Though maintaining Incomplete Records is easier but it is not a systematic method of maintaining accounts. Its limitations are as follows:

1. We cannot prepare a Trial Balance to ensure the accuracy of the accounts in the absence of the double entry system.

2. It fails to ascertain the accurate financial results of the organization.

3. Investigation and examination of the profitability, solvency, and liquidity are difficult. Hence, the outsiders and banks may not lend money for the expansion of the business.

4. In case of loss by fire or theft claiming the insurance amount causes great difficulty due to incomplete records and missing information.

5. Also, convincing the income tax authorities about the computed income is difficult in the absence of proper accounting.