Single Entry System Of Book Keeping

2nd PUC

Meaning

Any system of book keeping which is not a complete double entry system is called Single entry system.

In other words, any account which do not contain a complete record (i.e., a record of both the debit and credit aspects) of each and every transactions are called accounts from incomplete records.

Suitability

For small retailers For house holders For sole traders For small partnership firms with less

transactions. Street Hawkers etc.

Features

Incompleteness of accounting records There is no uniformity under this system All accounts are not maintained Partial information is given and not the

complete information It is simple and economical system of book-

keeping.

Advantages

It is simple and economical Time saving Suitability

Disadvantages

It is incomplete system of book keeping Difficulty to know the true financial position of

the business Non availability of important information Possibility of fraud Comparison not possible

Types of Single Entry system

Pure Single Entry system: In this type of system no subsidiary books are maintained and only personal account is maintained.

Simple Single Entry System: In this type of system only one subsidiary book i.e., Cash book is maintained along with personal account.

Quasi Single Entry System: In this type of system more than one type of subsidiary books are maintained along with personal account of trade debtors and trade creditors. Real account and Nominal account is not maintained.

Why single entry system exist

 Inexperienced and unknowledgeable staff 

Unaware of the importance of complete  records ( for loan, tax purposes etc…) 

Difference between single entry system and double entry system

Single entry system Both the aspects of each and

every transaction is recorded It is complete, scientific,

satisfactory and reliable system of accounting.

All types of accounts i.e., personal, nominal and real accounts are maintained

The capital of the proprietor is ascertained from the capital account maintained in the ledger.

The system is difficult and costly.

Double entry system Both the aspects of each and every

transaction is not recorded. It is not a complete, scientific,

satisfactory and reliable system of accounting.

All types of accounts are not maintained. Only personal account and cash account are kept

The excess of assets over liabilities is taken as capital.

The system is simple and less costly.

Statement of Affairs

A Statement of affairs, like a balance sheet, is a statement which shows the estimated values of assets and the liabilities of a concern as on a given date.

Format of Opening statement of affairs

Liabilities Amt (Rs) Assets Amt (Rs)

sundry creditors

Bills payable

Bank overdraft

Loan

OPENING CAPITAL

TOTAL

XXX

XXX

XXX

XXX

XXX

XXXX

Cash in hand

Cash at bank

Bills receivable

Stock

Investments

Land and building

Furniture

TOTAL

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXXX

In the books of Mr. …..

Statement of affairs as on 1/1/….

Format of Closing statement of affairs

Liabilities Amt (Rs) Assets Amt (Rs)

Sundry creditors

Bills payable

Bank overdraft

Loan

CLOSING CAPITAL

TOTAL

XXX

XXX

XXX

XXX

XXX

XXXX

Cash in hand

Cash at bank

Bills receivable

Stock

Investments

Land and building

Furniture

TOTAL

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXXX

Statement of affairs as on 31/12/…

Format of statement of Profit and Loss for the year ending 31/12/…

Particulars Amt(Rs) Amt(Rs)

CLOSING CAPITAL

Add: Drawings –

Cash drawings

Goods drawings

Less: Additional Capital

ADJUSTED CLOSING CAPITAL

Less: OPENING CAPITAL

GROSS PROFIT

Add: Incomes

Less: Expenses

NET PROFIT

When there is gross loss…..

Particulars Amt (Rs) Amt(Rs)

CLOSING CAPITAL

Add: Drawings

Cash drawings

Goods drawings

Less: Additional Capital

ADJUSTED CLOSING CAPITAL

Less: OPENING CAPITAL

GROSS LOSS

Add: Expenses

Less: Incomes

NET LOSS

Revised Statement of affairs as on 31 / 12 / …

Liabilities Amt(Rs) Assets Amt(Rs)

Sundry creditors

(-) Discount

Bills Payable

Opening Capital

(+) Additional capital

(+) Interest on Op. Cap

(+) Interest on Add. Cap

(+) Net Profit

(-) Net Loss

(-) Drawings

TOTAL

Cash in hand

Cash at bank

Bills receivable

Investments

Land and building

(+) Appreciation

Furniture

(-) Depreciation

TOTAL

Start With….

Problems