Single Entry System

Single entry system of accounting is a process of recording the daily transactions in a register usually in single line description. There is no universally accepted format of single entry accounts. It is adopted in small firms or businesses generally owned by individuals with a small transaction denominations. A journal of single entries is prepared and each transaction is recorded in the journal on daily basis.

Single entry was earlier used by the accountants and had no uniformity of reporting. This system is not compatible with larger firms and is not acceptable by investors and regulators. However in smaller businesses single entry system fulfills the requirements of individual entrepreneurs. Single entry accounting mechanism is also needed to be handled by a competent book keeper or accounting technician to incorporate all the necessary transactions in the single entry registers.

In many instances single entry accounting consists of cash book in a tabular format where cash or bank receipts are recorded with positive signs and cash or bank payments are recorded by negative signs. At the end of each working day closing balance of balances is ascertained and is carried forwarded to next day cash / bank book as opening balance. However, in its extended form sales, purchase, and receipts/payments registers are maintained separately along with party ledgers.

Example

Single Entry Cash Book

 

Date

Particulars

Bill No

Amount ($)

Dec 1

Opening Balance

 

10,000

Dec 5

Sale of goods

S25

5,000

Dec 10

Purchase of Raw material

P15

(2,500)

Dec 17

Purchase of Raw material

P20

(3,000)

Dec 20

Sale of goods

S26

7,500

Dec 24

Transport bill paid

T10

(1,000)

Dec 28

Sale of goods

S27

3,000

Dec 31

Payment of Salary and wages

SW12

(1,500)

Dec 31

Closing balance

 

17,500

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