What is Single Entry System? & Features
There are two aspects of each transactions i.e. debit and credit under double entry system. But under single entry system, only records of cash and personal accounts are maintained.
It records only one aspect of every transaction, therefore it is also often called as an incomplete system of recording transactions. In single entry system accounts relating debtors, creditors and cash are prepared, however, it ignores all impersonal accounts like salaries, wages, sale, purchases etc..
In other words it maintains a cash book and personal accounts but does not record nominal and real accounts. For example if goods are purchased from a supplier on credit, his personal account ais credited but no entry is made on the debit side of goods account.
Features of Single Entry System
Here are some features of single entry system.
- It maintains only accounts relating to person but ignores the real and nominal accounts.
- It also prepares the cash book but both personal and business cash transactions are recorded in same book.
- It is suitable to small traders having lesser number of transactions.
- It lacks the specific rules of maintaining books of accounts, as a result there is no uniformity in accounts of different firms.
- The trial balance can not be prepared under this system.