What is Single Entry System? It's features, objectives, types, uses.

Are you all curious to know, as to, What is Single entry system? and, its features, objectives and uses

So, let us see how this system works and its features, objectives, types and uses as well.

Meaning, Definition and Scope of Single Entry System:

Under the Single Entry System of bookkeeping, only one aspect of the transaction is recorded. Generally, each transaction has dual aspect such as the giving and receiving aspect. But, here, only one aspect either receiving or giving aspect is recorded in books of accounts.

This dual aspect concept such as the giving and receiving aspect is also termed as debit and credit. Under this system, only one aspect of the transactions is recorded. Here, this System is generally referred to as the accounting for incomplete records or incomplete system of recording.

For example, Cash paid to Supplier has two aspects. One aspect is Cash and another one is Supplier. But in this system, as explained earlier only one aspect is recorded. It means either Cash paid or Supplier name will be recorded in this system.

Very often, Sole trading concerns and small partnership businesses generally follow the Single Entry System of Bookkeeping. They maintain few records like Cashbook, Personal accounts like debtors or customers records and suppliers records. At the end of the year, these small business concerns want to know the financial performance and position. Here, generally, Accountants prepare income statement and statement of affairs to know the financial performance and financial standings.

Statement of Affairs is generally prepared to know the capital amount at the beginning and end of the year. Statement of Affairs is used to derive opening capital and closing capital amount. Capital amount is ascertained as the excess of assets over liabilities.

The Characteristic Features of Single Entry System:

The following are the features of this system as explained below. They are listed below.

1.It is an inaccurate, unsystematic and unscientific method of bookkeeping system for recording business transactions. Because there is only one aspect being recorded and it would be an unsystematic method to record transactions

2. Generally, Cashbook and Personal accounts such as debtors and suppliers accounts are maintained. Cash Book is the main register for all the transactions. Debtors and suppliers accounts are crucial as they are lending to or from the business.

3. Here, in this system, there will be no record of nominal accounts and real accounts. It means profit is calculated by the capital comparison method. Profit is calculated by taking the difference between opening and closing capital. Assets and Liabilities are ascertained along with the capital amount by preparing the Statement of Affairs at the end of the year.

4. Cash Book is the main register to trace the transactions such as payments to suppliers and cash received from debtors.

5. Cashbook generally mixes up the business transactions and personal transactions of the owner. This needs to be identified and segregated to prepare the financial statements at the end of the year.

6. Profit is only an estimate under this system which is ascertained using the available information from the cash book and debtors and creditors information as well. Thus, true profit and accurate financial position may not be ascertained in this system.

7. This system also lacks systematic and scientific methods. This system does not follow the basic golden rules of accounting or accounting principles or policies while preparing the accounting records and financial statements.

8. This system is mainly suitable for sole trading concerns and small business requirements. As these small businesses only maintain cash book, debtors accounts and suppliers information as well.

9. This system is also called accounts from incomplete records as this is the incomplete system of bookkeeping method where only one aspect of the transactions being recorded.

10. This system does not reflect the arithmetical accuracy of books of accounts as it does not follow the dual aspect of bookkeeping. Final accounts such as trial balance, trading and profit&loss account and balance sheet cannot be prepared.

The objective of Single Entry System:

The objective of this system is to record the cash related transactions and information relating to debtors and suppliers. To determine the profit and loss and assets & liabilities position with the help of available information.

To make record keeping economical and easy without adhering to the accounting principles and policies. To make the record-keeping suitable for small business firms and sole trading concerns as they are not required to maintain complete books of accounts in a systematic manner.

The types of single entry system:

There are generally three types to the system. They are:

1.Pure single entry system:

In this system, only personal accounts are maintained. For example, debtors accounts, suppliers accounts or customers accounts. This would help to gather the information relating to customers and suppliers.

2.Simple single entry system:

In this system, personal accounts and cash book is also maintained. Cashbook is the main register for all transactions. Here cash book gives information relating to assets or liabilities and payments made to suppliers or cash received from customers.

3.Quasi single entry system:

In this system, personal accounts along with cash book and subsidiary books are maintained. Here personal accounts, cash book and subsidiary books are maintained.

Uses, Advantages to the Single Entry System:

The following are the main uses for this system. They are explained below.

1.This system is economical and less expensive where only a few accounts are maintained such as cashbook, suppliers and debtors account,

2. This system is suitable for small-sized business firms where only required information is recorded in the books of accounts

3.It is easy to maintain accounts & books in this system as it is a simple and easy method of bookkeeping

4.This method of record-keeping is time-saving, economical or less expensive and easy to understand the transactions recorded.

5.No compliance requirements exist in this system. For example, small businesses using this system may not be required to maintain complete books of accounts to get the records audited by a professional accountant.

Conclusion:

Thus, now we are able to understand, as to, what is single entry system? and its features or types or uses as well. Thus it is a system to record the transactions with one aspect with low cost and time-saving method and also suitable for small business firms and sole traders.

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