Sign Up for Discounts
This form does not yet contain any fields.
    Thursday
    Apr142011

    What is a single entry system?

    A single entry system records each accounting transaction with a single entry to the accounting records, rather than the vastly more widespread double entry system. The single entry system is centered on the results of a business that are reported in the income statement. The core information tracked in a single entry system is cash disbursements and cash receipts. Asset and liability records are usually not tracked in a single entry system; these items must be tracked separately.

    The primary form of record keeping in a single entry system is the cash book, which is essentially an expanded form of a check register, with columns in which to record the particular sources and uses of cash, and room at the top and bottom of each page in which to show beginning and ending balances. An example of a cash book is:

    Nbr Date Description Revenue Expense Inventory Payroll
        Balance forward $41,000 $23,000 $5,700 $8,500
    1000 6/15 Utilities   400    
    1001 6/18 Merchandise     12,300  
    1002 6/20 Wages       4,500
      6/21 Bank deposit 13,100      
    1003 6/22 Supplies   1,200    
        Ending Balance $54,100 $24,600 $18,000 $13,000


    The most significant problems associated with a single entry system include:

    • Assets. Assets are not tracked, so it is easier for them to be lost or stolen.
    • Audited financial statements. It is impossible to obtain an audit opinion on the financial results of a business using a single entry system; the information must be converted to a double entry format for an audit to even be a possibility.
    • Errors. It is much easier to make clerical errors in a single entry system, as opposed to the double entry system, where separate entries to different accounts must match.
    • Liabilities. Liabilities are not tracked, so you need a separate system for determining when they are due for payment, and in what amounts.
    • Reporting. There is much less information available upon which to construct the financial position of a business, so management may not be fully aware of the performance of the business.

    Single entry systems are strictly use for manual accounting systems, since all computerized systems utilize the double entry system instead.

    It is generally possible for a trained accountant to reconstruct a double entry-based set of accounts from single entry accounting records, though the time required may be substantial. By doing so, you can then reconstruct the balance sheet and statement of cash flows.

    Related Topics

    Accounting journal entries
    The accruals concept
    Debits and credits
    Double entry accounting
    General ledger overview 

    PrintView Printer Friendly Version

    EmailEmail Article to Friend

    Reader Comments (1)

    There are two systems which are followed by any business, One of them is double entry system which is complete recording of every transaction i-e dual concept is applied and for every debit there is an equal credit, against to this is an incomplete system which does not record all transactions or which only record one aspect and may record both effects so all in all is an incomplete system, any such type of system is called a single entry system. Strictly speaking it should be called incomplete records rather than single entry system. Small businesses use single entry systems may be because they do not have trained staff or resources to run a complete system or they want to avoid complexities of double entry system but this was acceptable in earlier days now in these days not only they want to know about profit but tax authorities and other stakeholders also require them so they need to find the profit which can be relied upon. For this in single entry we have two methods. a) Net-Worth method b) Conversion method. If any one need detail of this please do tell I will try to give that.... regards
    Ahsan

    July 2, 2012 | Unregistered CommenterM.Ahsan
    Editor Permission Required
    You must have editing permission for this entry in order to post comments.