2nd year accounting Notes for I.Com Part II Single Entry System Chapter 2

SINGLE ENTRY SYSTEM 

1.      What is single entry system of book keeping?

Single entry system may be defined as a system in which accounting records are not kept strictly according to the double entry system of book keeping. 2.   Write down the formula for determining the net profit under net worth method?

The formula for determining the net income may be put as follows

Net income      =          capital at the end (Ending Capital

                                    (+)       Drawings

                                    (-)        Additional capital (Fresh capital) introduced

                                    (-)        Capital at the beginning (Beginning capital)

3.      Define characteristics of single entry system?

• It is suitable for the small businesses
• Only personal account are kept
• This system is flexible

4.      What are the limitations/defects of single entry system?

The defects of this system may be summed up as follows.

• Under this system only partial and incomplete record is kept because two fold aspects of transactions are generally ignored.
• As the two fold aspects of every transaction are not recorded a trial balance cannot be drawn up to test the arithmetical accuracy of the record
• As nominal accord are not maintained a profit and loss account cannot be prepared for want of information regarding the various income and expenditures
• As no real account are maintained the preparation of a balance sheet is not possible

5.      Write down the fundament balance sheet equation?

Assets = Liabilities + Owner’s Equity 6.      How many methods are for preparing final account from single entry system? There are two methods for preparing the final account

1)      First method of statement of affairs

2)      Second method conversion into double entry system

7.      What is statement of affairs?It is statement of assets and liabilities (including capital) prepared under the single entry system.8.      Define balance sheet? It is statement of assets and liabilities (including capital) prepared under the Double entry system.9.      What is major difference between single entry system and double entry system? Under entry system both debit and credit aspects of all the transactions are recorded whereas under single entry system some transactions are not recorded at all while some transactions are recorded in only one of their aspect either debit aspect or credit aspect ( only one aspect of transaction). 10.  What will be the capital of proprietor, in his assets are of Rs. 87000 and liabilities are of Rs. 20000?  Assets-Liabilities = Capital 87000-20000= 67000 11.   What shall be the profits of the concern in beginning capital is Rs 8000 and capital at the end Rs, 9000 drawing during the  year is Rs 1800 fresh capital Introduce Rs 500?

12.  Calculate the missing figures profits made during the year Rs, 2400 Drawing Rs.1200 capital at the end Rs 8000 opening capital? Fresh capital introduced during the year Rs 2000?

Net income = capital at the end (+) Drawings (-) Additional capital (-) Capital at the beginning

      2400 =       8000 + 1200-2000-Capital at the beginning

        Capital at the beginning = 8000 + 1200-2000-2400 = 4800

13.  Calculate the Net income/Loss

      Opening capital Rs. 5000, capital introduced Rs.1000

        Net income = capital at the end (+) Drawings (-) Additional capital (-) Capital at the beginning

        Net Loss = 0+0-1000-5000=   -6000

14.  Calculate the drawing s during the year:

Capital in the beginning Rs, 20000                    Capital introduced Rs, 25000

      Profit made during the year Rs.15000

        Net income = capital at the end (+) Drawings (-) Additional capital (-) Capital at the beginning

      15000 = 0+Drawings-25000-20000

      Drawings = 15000+25000+20000 = 60000 
     
15.  How Many methods are for conversion from single entry to double entry?

·         Prospective ( on and from the date on which arrangements are made for conversion)

·         Retrospective (on and from a date before the date of conversion) 16.  In case of conversion of single entry system into double entry. What necessary information / item are required for the preparation of trading account?

      In order to prepare trading account following information’s / items are required

      Opening stock + purchase + direct expenses-sales- closing stock 17.  In case of conversion of single entry system into double entry. What necessary information / item are required for the preparation of profit and loss account? The following item are required in order to prepare the profit and loss account  Indirect expense- other incomes 18.  In case of conversion of single entry system into double entry. What necessary information / item are required for the preparation balance sheet?

Following information are required in order to prepare the balance sheet

·         All assets

·         All liabilities

·         Opening capital

·         Profit or loss of the year

  

19.  How to prepare to Total debtors accounts?

Total debtors account
Opening balance	cash received from debtor during the period
credit sales	B/R Received
B/R dishonored	Return Inward
	Discount allowed
	Bad debts
	Closing balance

20.  How to prepare total creditors accounts?

Total Creditor account
Cash paid to creditors	Opening Balance
B/P granted	Credit Purchases
Return outward	B/P dishonored
Discount received
Closing balance