Theory question 104
Incomplete Records(a) What is single entry accounting system?
(b) State two characteristics of single entry accounting system.
(c) State three disadvantages of single entry accounting system.
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(a) Single entry is an incomplete system in which only one side of transactions is recorded – usually only cash and personal accounts are kept, not the full double entry.
(b) Any two: usually only a cash book and personal accounts of debtors and creditors are kept; real and nominal accounts are not kept; profit is found by comparing opening and closing capital; a statement of affairs is needed to find capital.
(c) Any three: a trial balance cannot be prepared, so arithmetical accuracy cannot be checked; accurate profit and a detailed trading and profit and loss account are difficult to prepare; fraud and errors are easily hidden; records are incomplete and may not be accepted by tax authorities or banks; asset and liability values are not reliable.
Contrast single entry with double entry in (a).