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P2 C10 Accounts from Incomplete Records — Account STD 11 Commerce — Question

Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C10 Accounts from Incomplete Records3 Marks
Question
Discuss the limitations of Single entry system In detail.
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Answer

The limitations of single entry system are as under: $1.$ Importance only to personal accounts : In this system, importance are given only to personal accounts. Impersonal accounts are not opened in the ledger. So, it is not possible to get information of all accounts. $2.$ Trial balance can’t be prepared : As dual effect of all transactions are not recorded, trial balance can’t be prepared. Hence, it is not possible to check the arithmetical accuracy of the accounts. $3.$ Profit or Loss can’t be ascertained : As not prepared, it is not profit or loss at the end nominal accounts are possible to know the of the year. $4.$ Financial position can’t be obtained: In this method as assets accounts are not kept and trial balance is also not prepared. Hence, it is not possible to prepare final accounts, therefore it is also not possible to know the true and fair financial position of the business. $5.$ Statistical information can’t be obtained: As two fold effects of all transactions are not recorded, it is not possible to obtain statistical information. $6.$ Errors of rectifications are not easy: Errors can be detected and prevented easily in the double entry system, but it is not so far easy in this system. $7.$ Possibilities of frauds : In this system, it is not possible to check the arithmetical accuracy of the accounts, hence there are more possibilities of errors, manipulation in accounts, frauds, etc. $8.$ Comparison i not possible: Due to insufficient record of information, comparison of accounts with previous years are not possible in this system. $9.$ Difficulties : Due to inadequate information, difficulties arise in taking decisions in determining purchase price, taking a loan or insurance, etc.

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