Today, no one use the single entry system for maintaining the accounting record because this is incomplete system of accounting. We do not keep record on double entry system. All the transactions are recorded only one side either in cash book or in debtor or in creditor list. Due to this, there are lots of limitations will begin in it which we can explain in following lines.
1. Lack of Mathematical Accuracy
There are no record of balances of accounts because we do not make ledger. Due to this, we can not make the trial balance for checking mathematical accuracy. In other words, there is big chance of mathematical errors and mistakes in this system.
2. No Scientific System of Accounting
Accounting experts think, this is not a scientific system of accounting. Instead of using this, business organisation should use the double entry system of accounting which is fully scientific under accounting standards.
3. No Use for Finding Financial Position
Just knowing cash, creditors and debtors balance in this system, we can not find the financial position. So, this system has no use for finding financial position. Without knowing current financial position, doing business is big risk. So, all those who is using single entry system are doing business under big risk of loss of capital.
4. No Legal Validity
Accounting records which are made under single entry system is not accepted by law. Because we do not verify these records under scientific rules of accounting.
Related : MCA Accounting Notes
1. Lack of Mathematical Accuracy
There are no record of balances of accounts because we do not make ledger. Due to this, we can not make the trial balance for checking mathematical accuracy. In other words, there is big chance of mathematical errors and mistakes in this system.
2. No Scientific System of Accounting
Accounting experts think, this is not a scientific system of accounting. Instead of using this, business organisation should use the double entry system of accounting which is fully scientific under accounting standards.
3. No Use for Finding Financial Position
Just knowing cash, creditors and debtors balance in this system, we can not find the financial position. So, this system has no use for finding financial position. Without knowing current financial position, doing business is big risk. So, all those who is using single entry system are doing business under big risk of loss of capital.
4. No Legal Validity
Accounting records which are made under single entry system is not accepted by law. Because we do not verify these records under scientific rules of accounting.
Related : MCA Accounting Notes
