ACCT 120 TOPIC SEVEN.pdf - KABARAK UNIVERSITY SCHOOL OF...

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1KABARAKUNIVERSITYSCHOOL OF BUSINESSP.O Private Bag – 20157, KABARAK, KENYALESSON FOURTEENTOPIC SEVEN: INCOMPLETE RECORDS/SINGLE ENTRY SYSTEMExpected Learning outcomesBy the end of this lesson you will be able to1. Identify the key features of single entry system2. Prepare financial statements using information from the single entry systemIntroductionSingle entry system is a method employed in recording transactions that does not that intoaccount the cause and effect of transaction. According to Carter‘Single Entry system is a methodor a variety of methods, employed for the recording of transactions, which ignore the two-foldaspect and consequently fails to provide the businessman with the information necessary for himto be able to ascertain the position’. Single entry system consist of;(i) double entry in respect ofcertain transactions such as cash received from debtors,paid to creditors etc.(ii) Single entry incertain aspects as cash purchases, cash sales, expenses made,fixed assets purchased etc.(iii) noentry in respect to certain transactions such as depreciation ,bad debts, etc.Reasons for incomplete records:a)Managers or owners may not have the skills or expertise in preparing and maintaining anaccounting system (records and procedures).b)It may not be economical for the business to maintain accounting records due to thevolume or/and nature of transactions (small scale businesses)c)Records are destroyed (e.g. through fire), stolen or misplaced.Features of Single Entry Systemi.Single entry does not take into account the double entry effect of all transactionsii.Usually, only Personal accounts are prepared and real and nominal accounts are avoided.Ledger accounts containing personal accounts of debtors and creditors may be kept andall other accounts being omitted e.g Purchases, Sales,Wages,carriage inward, stationery,rent, Lighting and Heating. When goods are sold on credit, the personal account of the
2customer is debited with the value of goods sold but no entry is passed to the credit ofsales.When goods are bought on credit a supplier ledgers is opened and this credited withthe amouts of the goods bought but its double entry is not completed.(i.e debting theInventory or Purchase account is not done.iii.Cash Book records both business and personal transactions.iv.Too much dependence on Source documents to ascertain final status of the business e.gthe figure for credit purchases may not be readily available and can only be traced basedon the original voucher issued by the supplier similar to sales figures.v.There is no standard procedure in maintaining records and vary from firm to firm.vi.Usually found in a sole trader or a partnership firm.AdvantagesIt is easy and simple method of recording business transactions.

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Term
Fall
Professor
NoProfessor
Tags
Balance Sheet, Generally Accepted Accounting Principles

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