INTRODUCTION

There are two system of according called single entry and double entry. Single
entry denotes a system of accounting where cash book is prepared and no other ledger
accounts are prepared excepting personal accounts, preparation of cash book shows all
receipts and payment of cash. This system of accounting does follow the plrinciples of
double entry stem. It has been rightly told that single entry system is nothing but an
admixture of single entry, double entry and no entry system because :

 For recording cash book one aspect either receipts or payment is recorded.
 The principles of double entry is followed for recording transazctions relating to
personal accounts.
 No entry is passed for recording of internal transaction like depreciation on assets.
Single entry is not at all a system as it is not based on scientific principles of
recording. Because of this reason, it is sometimes called as “Accounts from Incomplete
records”. Single entry method of recording financial transaction is based on personal
judgement and assumption which leads to different accounting results. Accounts from
incomplete record is that set of products for analysis of transactions in the from of
double entry system.
The expression ‘accounts from incomplete records’ is a very flexible way of
keeping the accounting records. The degree of flexibility varies from one business to
another, according to the nature and complexity.
Generally, the account from incomplete records may be classified into the
following 3 categories.
1. Pure single entry system

Under this system, only personal accounts of the debtors and creditors are
maintained. No records of real or nominal accounts is maintained.

2. Simple single entry system

 Under this system, (i) personal Accounts : and (ii) cash book or cash account
are maintained. The posting from the cash book is made only to the personal
accounts and not to the real or nominal accounts.
3. Quasi single entry system
Under this system, (i) personal Accounts; (ii) cash book ; and (iii) some other
subsidiary books are maintained. The main subsidiary books maintained are
purchases book, sales book, Bills receivable Book and Bills playable book. Posting to
the personal accounts is only made from the cash book and other subsidiary books
but not to the real on nominal accounts.
Quasi single entry system means partly single entry system because majority
of the subsidiary books are maintained in this method.

Salient features of accounts from Incompolete records

The salient features of accounts from incomplete records can be put as follows :

1. Maintenance of personal accounts : Usually under this system personal accounts

are maintained, while Real and nominal accounts are avoided. On account of this
reason some accounts define as a system where only personal accounts are
maintained.
2. Maintenance of cash book : A cash book is maintained, which usually mixes up
both the personal transactions and business transactions.
3. Flexibility : The recording procedure under accounts from incomplete records can
be adjusted according to the information needs of a particular business
enterprise. Even the knowledge of principles of double entry system is not
required under this system.
4. Suitability : The system is suitable in case of small, proprietary or partnership
concerns. Limited companies cannot adopt this system on account of legal
requirements.
5. Unsystematic Recording : There is no systematic method of recording because
cash transaction and personal account transactions are recorded. There is no
scope of recording revenues, gains, expenses and losses.
6. Dependence on vouchers : There is much emphasis on vouchers because for
ascertaining profit and loss and other information vouchers are needed.
7. Less degree of accuracy : High degree of accessory is not levied for ascertainment
of profit and so, only estimates of profit earned or loss suffered is mode.
8. Preparation of final accounts : It is very difficult to prepare final account under
single entry set upo, preparation of trading and profit and loss account will be
made possible only after conversion of available information into double entry
records. The figures relating to assets and liabilities are not reliable as these are
based on estimates.

Uses of accounts from Incomplete records :

The following are the uses of accounts from incomplete records :

1. Simplicity : Due to simplicity and lack at rigidity any one can maintain it without
any adequate knowledge of accounting.
2. Limited Number of accounts : A limited number of accounts are to be opend
under this system since the transactions relating to such book and personal
accounts are only maintained.
3. In expensive : This is economical system for such person whose business on a
small scale and the number of transactions are limited.
4. Utility of certain accounts : Accounts from incomplete records is preferred to
double entry system by some businessmen because they consider cash books.
Debtors Accounts and creditors account as must important. They feel the double
entry system as a luxury.
5. Tax Evasion : Sometimes this system is purposely adopted to deceive the fixation
authorities.
 6. According for an event : In the case of an accounting for an even i.e, social
function, academic event, festival etc., this system is very useful.

Limitations of accounts from incomplete records

The system suffers from several limitations :

1. Difficulty in checking Arithmetical Accuracy: Arithmetical accuracy of the books of

accounts is not possible since the trial balance can’t be prepared under this
system. It increases the possibility of more errors, frauds and misappropriations.
2. Difficult to ascertain true profits : It is not possible to ascertain the correct
amount of profit or loss of the film since the nominal accounts are missing under
this system.
3. Difficult to judge the financial position : In the absence of true figure of profits
and correct information aout the assets and liabilities of the business, the
balance sheet cannot be drawn up. Therefore, the real financial position amount
be known at the end of the accounting period.
4. Difficult to Assertain Gross Profit : The proper records of sales and purchases are
not maintained under single entry system. As Invading Accounting cannot be
prepared so it is not possible to find out the gross profit at an organization.
5. Lack of statistical data : As the complete recovered of all transaction is not
maintained, hence use to statistical information about the business cannot be
obtained. For example - trend at increase/decrease in sales cannot be obtained.
Even comparison of business from year to year is not possible because of lack of
statistical data.
6. Tax assessments : Single propler accords of sales and profits of the business are
not maintained under the single entry system, the proper assessments of sales
tax and income tax are not possible. Even the income tax authorities do not
upon this incomplete system of book-keeping.
Example - From the following information, prepare a statement of profit/loss showing
the working as sale of business during the year 2014-15 :

Amounts Rs.
Capital on 1.4.2015 4,00,000
Capital on 31.3.2016 4,50,000
Drawings during the year 25,000
Fresh capital introduced 15,000

Statement of profit or loss for the year ending 31, 3,200/-

Particulars Amount Rs.

Closing capital as on 31.3.2016 4,50,000
Add : Drawings during the year 25,000
4,75,000
Less : Fresh capital introduced during the year 15,000
Adjusted during capital 4,60,000
Less : Opening capital 4,00,000
60,000
CONCLUSION

The single-entry book-keeping system or single-entry accounting system is a

method of book-keeping relying or a one divided accounting entry to maintain financial
information. Most businesses maintain a record of all transaction based on the double-
entry book-keeping system. However, many small, simple businesses maintain only a
single-entry system that records the “bane-essentials”,. In some cases only records of
cash, account receivable, accounts payable and taxes paid may be maintained. This type
of accounting system with additional information can typically be completed into an
income statement and statement of affairs by a professional accountant.