Single entry transaction system of accounting



Posted on 06-05-2016        By ADMIN



Single entry transaction  system of accounting

This method of recording transaction is unscientific andincomplete. Some experts consider that it is not at all a system of accounting.Under this system, only one aspect of the transaction (either debit or credit)is to be recorded instead to two aspects. Hence this system is called singleentry system.

 In this method, the accountant maintains only personal accountsand cash book. Alternatively, the accountant maintain personal accounts, realaccounts and leaves normal accounts. That is why, this method is known asincomplete double entry system. Since this system records only one aspect ofthe transaction, it is unscientific and incomplete. Total information is notavailable for preparing trail balance. Therefore, it is not possible to preparefinal account at the end of the financial year to ascertain accurate financialposition. Sole trading organizations and partnership firms may follow thismethod. But corporate bodies shall follow double country book keeping systemonly. Small business units are using this system even now. It suffers from thefollowing defects Limitations.

 

All transactions are not recorded.

Only a few accounts are maintained.

Trail balance cannot be prepared at the end of the year toknow the arithmetical accuracy.

Final accounts cannot be prepared to find out operationalresults and financial position of the business accurately.

 



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