There are many ways of doing accounting and every organization can adopt any method according to its convenience and one of these methods is a single entry system. It is a concept or system for accounting just like a double entry system but in this the transactions are recorded in the book without following double entry. In this only cash and person related transactions are managed, like from whom money is to be taken and to whom money is to be given, etc.
It was used more in earlier times but as the accounting field evolved, its use decreased. Nowadays most of the organizations use the double entry system to manage financial transactions because it is systematic and scientific. Note: Which method to use for accounting may depend on the organization, nature of the organization, governing authority, etc.
Table of Contents
What is a Single Entry System?
A single entry system is a concept or system in which transactions are recorded without following dual aspects (debit and credit), hence it is also called the incomplete record of accounting. It is used by most of the small businesses who do not follow proper accounting and it is economical and easy to manage compared to a double entry system.
It is not accepted by Generally Accepted Accounting Principles (GAAP) as it does not follow proper accounting and large organizations cannot use it for accounting as it does not prepare journal entries, ledger accounts, trial balance, profit and loss account, balance sheet, etc. and it is very difficult to find errors in it and it is easy to manipulate it.
Features of Single Entry System
Following are the features of single entry system:
1. Concept:
It is a concept that is used to record the transaction and is similar to the dual entry system. According to this, the transaction is recorded in the book without dual entry. In simple language, it records transactions without following the debit and credit.
2. Single Entry:
In this, only a single entry is passed to record the transaction, that is why it is called a single entry system. For example, cash payments are reduced by cash, and cash receipts are added to cash. In this, journal entry is not passed like in the double entry system.
3. Not Systematic:
It is not systematic like the double entry system because it does not use any systematic principles, rules, etc. to record the transactions. In this, transactions can be managed through any medium because there is no system to record the transactions.
4. Easy:
It is easy to record transactions through this system as it does not require knowledge of any principles, rules, etc., all the work is done with just basic knowledge. If we compare it with the double entry system, then it is much easier than that.
5. Economical:
This is a cost-effective way of recording transactions as it does not require any expertise and does not require maintaining too many books. Even a person with basic knowledge can record transactions and only a few books need to be maintained like cash book, etc.
Read Also:
QNA/FAQ
Q1. What is a single entry system?
Ans: A single entry system is a concept or system in which transactions are recorded without following dual aspects (debit and credit).
Q2. Is single entry system economical?
Ans: Yes, a single entry system is economical.
Q3. By what other name is the Single Entry System also known?
Ans: A single entry system is also known as incomplete record of accounting.
Q4. Is it true that single entry system is not simpler than double entry system?
Ans: No, it is wrong because single entry system is simpler than double entry system
Q5. Write the features of a single entry system.
Ans: Following are the features of single entry system:
1. It is a concept or system.
2. It records only one entry.
3. It is an economical method.
4. It is an easy method.
5. It is not systematic and scientific.
6. It is difficult to spot the error in it.
7. It does not prepare a balance sheet.
8. It is easy to manipulate.
