Definition and Explanation of Single Entry System:
Define and explain single entry system of
What are limitations of single entry system of
It is difficult to define single entry
system because, in fact, there exists no system like single entry
system. Broadly speaking, it is a defective double entry system. Any system
that falls short of complete double entry method is called single entry
system. Under this method, sometimes both the aspects of transactions are
recorded, sometimes only one aspect is recorded or sometime no aspects of
transactions is recorded in the books. As a general rule under the single
entry practice only the personal aspects of the transactions are recorded
and the nominal and real aspects are omitted altogether. As the name
implies, the single entry system does not take into account the double
affect of every transaction. The ledger contains only the personal accounts
of debtors and creditors, all impersonal accounts such as purchases, sales,
wages, carriage, rent etc., are not recorded. Thus the system does not
consider the two fold aspect of every transaction. In short single entry
system may be called a mix of double entry, single entry and no entry.
Single entry system may be defined as a
system which does not strictly conform to the double entry system of
bookkeeping. Under this system what is found in practice is an intermixture
of single entry, double entry and no entry.
Defects/Limitations/Disadvantages of Single Entry System:
The limitations or defects or
disadvantages of single entry system may be summed up as follows:
Under this system only partial and incomplete
record is maintained because two fold aspects of transactions are generally
As the two fold aspects of every transaction
are not recorded, a trial balance cannot be drawn up to test the
arithmetical accuracy of the records.
A nominal accounts are not maintained, a
profit and loss account cannot be prepared for want of information regarding
the various income and expenditures.
As no real accounts are maintained the
preparation of balance sheet is not possible.