Defects/Limitations/Disadvantages of Single Entry System of Accounting
Defects/Limitations/Disadvantages of Single Entry System of Accounting:
Learning Objectives:
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What are the limitations or disadvantages of single entry system of bookkeeping.
The limitations or defects or disadvantages of single entry system may be summed up as follows:
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Under this system only partial and incomplete record is maintained because two fold aspects of transactions are generally ignored.
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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.
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A nominal accounts are not maintained, a profit and loss account cannot be prepared for want of information regarding the various income and expenditures.
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As no real accounts are maintained the preparation of balance sheet is not possible.