QS Study

Features of Single Entry:

Single Entry System is an incomplete, inaccurate, unscientific and unsystematic system of book keeping. The name of the system itself shows that the double aspects of business transactions are not recorded.

  1. Suitable for sole traders and partnership firms: The single entry system is suitable only for sole traders and partnership firms. Companies cannot keep books on single entry system because of legal provisions.
  2. Only personal accounts and cash accounts are kept: In this system it is very common to keep only personal accounts and to avoid real and nominal accounts. It also keeps one cash book which mixes up business as well as private transactions.
  3. All transactions are not recorded: All business transactions are not recorded in the books of account. Some of them are recorded in the books of accounts, certain transactions are noted in the diary and some of them are in the memories.
  4. Lack of uniformity: This method lacks uniformity as it is a mere adjustment of double entry system, according to the convenience of the individual.
  5. Collection of information from original documents: It is rather often seen that for information one has to depend on original vouchers. For example to know total purchases and sales, one has to depend on copies of invoices.
  6. Profit only an estimate: Profit under this system is only an estimate.
  7. True financial position cannot be ascertained: True financial position cannot be ascertained as Balance Sheet is not prepared due to the absence of nominal and real accounts.
  8. Not accepted by Tax Authorities: Due to incompleteness, inaccuracy, and unsystematic nature, it is not accepted by tax authorities.