Meaning: Small traders like hawkers, sole traders, small shopkeepers do not want to maintain all books of accounts. As per requirement, they keep only cashbook and ledger and record transactions relating to cash and personal accounts only. In this system double effect may not be given to each transaction of business. As per requirement, only one effect is given to some transactions, hence it is known as Single Entry System.
Definitions: According to Eric Kohler, “single entry system is, a system of book-keeping in which as a rule only record of cash and of personal accounts are maintained, it is always incomplete double entry, varying with circumstance.”
According to R. N. Carter, “Single entry system is a method or a variety of methods, employed for the recording of transactions, which ignore the two-fold aspects and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the financial position.”
Explanation: Single entry system is an incomplete method of accounting. Under this system, some transactions may have two effects, while some have one effect only, e.g., (l)Cash received from customer (debtor). In this transactions, two effects are given, one effect is in cashbook and second effect is in customer’s A/c. (2) Purchased furniture by cash. In this transaction, only payment of cash effect is given in cashbook, while second effect is not given in furniture A/c, because of this system Real accounts and Nominal accounts are not maintained.
* For Extra Knowledge.
Characteristics of Single Entry System:
1. Incomplete records: As a rule, only cash transactions and personal accounts transactions are recorded. It is an incomplete method of accounting.
2. Mixture of Single Entry and Double Entry System: Most of the transactions are recorded with one effect whereas others are recorded with double effect and several transactions are not recorded.
3. Books as per requirement: Small traders keep a few books of accounts like cashbook and ledger as per their requirement.
4. Only personal accounts : Only personal accounts are maintained in the ledger.
5. Small retailers : Generally small traders like hawkers, small shopkeepers, street-venders, small retailers, etc. prepare accounts under this system.
6. Records : Complete accounting records are not maintained.
7. Uniformity : There is no uniformity in this systems for keeping books of accounts by traders.
8. Annual accounts : Trial balance and Balance sheet can’t be prepared under this system.
9. Entry for internal transactions: In this method, there is no effect (or entry) for internal transactions of business, e.g., Depreciation on assets, Interest on capital, etc.
