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What is Single entry system?
According to Carter ‘Single Entry system is a method or a variety of methods, employed for the recording of transactions, which ignore the two-fold aspect and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the position’
Features
- Usually, only Personal Accounts are prepared.
- Cash Book records both business and personal transactions.
- Too much dependence on Source documents to ascertain final status of the business.
- There is no standard procedure in maintaining records and vary from firm to firm.
- Usually found in a sole trader or a partnership firm.
Advantages
- It is easy and simple method of recording business transactions.
- Less expensive as qualified staff is not required.
- Suitable for small businesses where cash transactions occur and very few assets and liabilities exists.
- Flexible method as there are no set procedures and principles followed.
Disadvantages
- No double entry, thus Trial Balance cannot be prepared to check the arithmetical accuracy of books of accounts.
- Information related to assets and liabilities cannot be reliable because respective accounts have not been maintained.
- True Profit and Loss cannot be ascertained.
- Comparison of accounting performance with previous year or other firms not possible as any standard principle or procedure is not followed.