Financial Accounting-Module 1-Single entry system PDF

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A theory short note of module 1-single entry-in Financial Accounting giving the major points like it's objectives, feature,merits,demerits etc....

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Juraz-Enhance Your Commerce Skills with Us FINANCIAL ACCOUNTING (B.COM) Module I (Single entry system) Single Entry System According to Kohler “a single entry system is a system of book keeping in which as a rule only records of cash and personal accounts are maintained. It is always incomplete double entry varying with circumstances” Objectives of single-entry system  To record business transactions.  To prepare trial balance.  To know profit or loss.  To know financial position.  To open account and to obtain balances. Features of single-entry system  It does not follow double entry system.  It is an incomplete record.  It is inaccurate and unscientific.  It is flexible.  It is suitable to small concern.  It maintains personal and cash accounts only. Advantages / Merits of single entry system 1. It is a simple method of accounting. 2. It is less costly. 3. It is highly flexible. 4. It is suitable for small business. 5. It is possible to record transactions quickly

Limitations / Demerits / Defects of single entry system 1. It is incomplete and inaccurate. 2. It is unscientific and unsystematic. 3. It is not suitable for large business. 4. It is not acceptable to income tax authorities. 5. It is difficult to value goodwill of the business. 6. It is difficult to detect errors and frauds. Difference between single entry and double entry system Single entry system Double entry system One aspect of transaction is Both the aspect of transactions recorded. are recorded. It is incomplete and inaccurate. It is complete and accurate. It is unscientific and It is scientific and systematic. unsystematic. It is suitable for small business. It is suitable for all business. It is less costly. It is costly. Trial balance cannot be Trial balance can be prepared. prepared. Only personal accounts are Personal, real and nominal maintained. accounts are maintained. Types of single entry system  Pure single entry system Under this system, no subsidiary books are maintained. Personal accounts of debtors and creditors are maintained.  Simple single entry system Under this system, cash book and personal accounts of debtors and creditors are maintained.

 Quasi single entry system Under this system, personal accounts, cash books and some subsidiary books are maintained. Statement of profit and loss It is a statement prepared under single entry system in order to find out amount of opening capital or closing capital of the business. Difference between profit and loss account and statement of profit and loss Profit and loss A/c Statement of Profit and loss It is an account. It is a statement. It is prepared under double It is prepared under single entry. entry. It starts with gross profit or It starts with closing capital. loss. It shows exact profit or loss. It shows approximate profit or loss. It gives reason for earning It does not give reason for profit or incurring loss. earning profit or incurring loss. Statement of affairs It is a statement of assets and liabilities prepared under single entry system to ascertain the financial position of the business. Difference between statement of affairs and balance sheet Statement of affairs Balance sheet It is prepared under single It is prepared under double entry system. entry system. It is not reliable. It is reliable....