Single entry system is that system of accounting in which we don't keep full record. We just record cash receipt and payments, debtors and creditors. We leave to record all other assets, liabilities and nominal accounts. So, it is very difficult for us to prepare trial balance, profit and loss account and balance sheet. It is totally unscientific system of accounting.
We can explain its main characteristics in following points :-
1. No Following Rules of Double Entry System of Book Keeping
This system of accounting does not follow double entry system's rules. In double entry system, we record each transaction into two accounts. One account will be debit and other account will be credit. But in single entry system, we keep record only in one account. For example, we make cash book for recording receipt and payment but we do not open the accounts which are shown in cash book. We have purchased furniture. This furniture's cash payment will show in the cash book but we do not open furniture account in single entry system.
2. No Real and Nominal Accounts
In single entry system, we do not make real and nominal accounts. Real accounts are of physical assets account which are not opened in single entry system. Nominal accounts of expenses and incomes which are also not opened in single entry system.
3. Only in Small Individual Business
This system of accounting is only suitable for small individual business because with this system we can just take the idea of our total cash, total debtors and total creditors. We can not find our financial position and income position in this system of accounting.
Related : MCA Accounting Notes
We can explain its main characteristics in following points :-
1. No Following Rules of Double Entry System of Book Keeping
This system of accounting does not follow double entry system's rules. In double entry system, we record each transaction into two accounts. One account will be debit and other account will be credit. But in single entry system, we keep record only in one account. For example, we make cash book for recording receipt and payment but we do not open the accounts which are shown in cash book. We have purchased furniture. This furniture's cash payment will show in the cash book but we do not open furniture account in single entry system.
2. No Real and Nominal Accounts
In single entry system, we do not make real and nominal accounts. Real accounts are of physical assets account which are not opened in single entry system. Nominal accounts of expenses and incomes which are also not opened in single entry system.
3. Only in Small Individual Business
This system of accounting is only suitable for small individual business because with this system we can just take the idea of our total cash, total debtors and total creditors. We can not find our financial position and income position in this system of accounting.
Related : MCA Accounting Notes
