Meaning of Incomplete Records (or Single Entry System).

Incomplete accounting records are those accounting records which, at present, are not complete according to double entry system of book-keeping. Many experts describe it as Single Entry System but according to majority of accountants, it is better to describe it as Incomplete Records because:

Few transactions are recorded completely therefore two fold aspects (Debit and Credit) of the transactions are recorded, e.g., cash paid to creditors (recorded in creditors A/c and cash A/c ). cash received from debtors (recorded in Debtors A/c and Cash A/c) etc:

The majority of transactions are recorded partially e., Single aspect only. e.g., cash sales, cash purchases, salary, rent, etc.

There are certain transactions which are not recorded e.g., depreciation, bad debts etc.

In short, a single entry system is incomplete, inaccurate, unscientific and unsystematic method of book-keeping Kohler has defined single entry system as follows: A system of book-keeping in which as a rule only records & Cash and personal accounts are maintained, it is always incomplete double entry varying with the circumstances.

According to R.N. Carter, Single Entry cannot be termed as a system, and it is net based on any scientific system like Double Entry System. For this purpose, Single Entry is now-a-days known as preparation of accounts from incomplete records. From the above description it becomes clear that single entry is not any particular system of accounting but rather it is the Double Entry System is an incomplete and disjointed form.

Special Features of Single Entry System

  1. It maintains personal accounts and cash book, while real and nominal accounts are not maintained.
  2. It depends on original documents, e., receipts/vouchers, together necessary data.
  3. There is no uniformity as the system differ from firm to firm.
  4. There are no fixed norms to follow.
  5. It is flexible in its operations.
  6. It is most economical and suitable for sole trader or partnership firm.

Disadvantages or Defects of Single Entry System

Arithmetical accuracy cannot be checked as trial balance cannot be drawn under single entry system.

Net Profit/Net Loss cannot be ascertained as nominal accounts are not maintained. Therefore, trading and profit and loss account can not be prepared.

Financial position of the business cannot be drawn since real accounts are not maintained. In the absence of lack of correct information in respect of Net Profit/Net Loss and assets and liabilities, the Balance Sheet cannot be prepared.

Encourage indiscipline, recklessness, fraud and misappropriation in day-to-day operations.

Not suitable to limited company on account of legal restrictions.

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