Meaning of Single Entry System
Single Entry System may be defined as an incomplete account recording system. Under this system, all transactions are recorded on a single entry basis. We record only one aspect of the transaction. In some Transactions, we also record two entry but they are not linked with each other. Since all transactions are not recorded under the double-entry System, it is not possible to prepare a Trial Balance and Profit & Loss Account and the Balance Sheet cannot be prepared.
Advantages of Single Entry System
- Easy to understand: A single entry system is very easy to understand even a layman can understand. so, prepare the accounts is very easy.
- Cost-effective: In single entry system we not require any accountant and chartered accountant for audit the account so the cost is very less cooperative to double-entry book-keeping system
- Time-Saving: Under single entry system, we record only one entry for every transaction thus, this lead to time-saving for the business
- Good For Small Business: Small business can implement the single entry system as it is cost-effective and easy to understand
- Helps in Decisions Making: It provides the basic information to the manager about the sales and profit so they can make decisions accordingly.
- Evidence of transaction: Any written document use as evidence. Single entry account book records all the transactions so this can be use as evidence.
- Replace Memory: under this system, we recorded all the transactions. In case we forget the transaction we can check those in the accounting books.
Disadvantages of Single Entry System
- low accuracy: In this system, the accuracy of the account is low as we record only one aspect of the transactions.
- Calculation Error: If there is any calculation error so we not have cross-checking option as we have in the double-entry system.
- Not Able to Prepare Financial statement: In Single system, we can not prepare the financial statements Profit & Loss Account and Balance Sheet.
- Manipulation of Account: under this system manipulation of the account is very easy there is no cross-check option.
- Personal Biasedness: Account can be biased but it depends upon who prepares the accounts.