Defects/Limitations/Disadvantages of Single Entry System of Accounting:
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:
Under this system only partial and incomplete record is maintained because two fold aspects of transactions are generally ignored.
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.
You may also be interested in other articles from “single entry system” chapter:
- Definition and Explanation of Single Entry System
- Defects/Limitations/Disadvantages of Single Entry System
- Statement of Affairs – First Method
- Difference Between Statement of Affairs and Balance Sheet
- Conversion into Double Entry System