SINGLE ENTRY AND INCOMPLETE RECORDS

SINGLE ENTRY SYSTEM

The term single entry is applied to any system, which does not provide for the two fold aspect of

transactions; while the alternative term, incomplete records‟ is often applied to books of account

kept on such a single entry or incomplete double entry system.

“single entry” recognises only the personal aspect of transactions, with receivables and payables.

In practice, however, a cashbook is invariably kept, but, with this exception, the impersonal

aspect of transactions is usually left entirely unrecorded

Examples of Organizations that use Single Entry Accounting System

They are ; private and community foundations, professional associations, research and scientific

organizations, social and country clubs, trade association, labour organizations, political parties,

church, mosque, society, etc

Characteristics of Single Entry Accounting System

i. Two – fold aspect (double entry) of each transaction is ignored.

ii. Only personal accounts of debtors and creditors are kept.

iii. Profit or loss can be ascertained by comparing capital at the beginning and capital at the

end.

iv. Real and nominal accounts are not kept.

v. The opening capital can only be ascertained by preparing the statement of affairs.

Conditions under which single entry may be used are:

i. The business uses cash basis accounting system and not accrual basis accounting system

ii. The business has few financial transaction per day

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 iii. The business does not sell to customers on credit basis.

iv. The business has very few employees.

v. The business has few expensive supporting physical assets.

vi. The business is privately operated either as a sole proprietor or as a partnership.

INCOMPLETE RECORDS

Incomplete records refer to a system in which available records of a business are too few to

facilitate the preparation of financial statements of the business.

(B) Causes of Incomplete records

1. Loss of records by fire out break

2. Loss of records by outright carelessness.

3. Loss of records by theft

4. Loss of records due to suspected fraud, misstatements and irregularity

Ledgers Which Might Not Have Been Properly Kept In Single Entry/ Incomplete Records

i. Cashbook

ii. Sales or debtors ledger

iii. Purchases or creditors ledger

iv. Private Ledger

v. Nominal or general ledger.

Steps in converting single entry/ incomplete records to double entry

i. Preparation of statement of affairs to determine the capital (opening or closing) of the

business.

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 ii. Analysis of cashbook (receipts and payments) to ascertain cash or bank balances and

drawings of owners.

iii. Preparation of total debtors and total creditors accounts to ascertain credit sales and credit

purchases of the year.

iv. Adjustment of nominal account (revenues and expenses) to determine the amount

chargeable to profit and loss accounts and balance sheet during the year.

v. Preparation of statement of profit or loss for the business.

vi. Preparation of financial statements (trading, profit and loss accounts and balance sheet.)

Illustration One:

Makau Super Market has an opening capital of N62,000 and the closing capital reads, N85,000

(assuming that there was no drawing). The profit generated for the period in question will be

calculated as thus: N

Closing Capital 85,000 Less: Opening Capital 62,000 Net Profit 23,000

Explanation: The increment of N23,000 is attributed to the profit earned during the period.

NOTE: The following equation could help in the determining the components of financial

statement especially when the records are incomplete. Thus:

1. Assets = Capital + Liabilities

Capital= Assets – Liabilities

Liabilities= Assets- Capital

2. To determine:

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Profit = Closing Capital + Drawing -Opening Capital- Additional Capital

Illustration Two

ABG Business Centre does not maintain proper account based on double entry principle. The

proprietor operates two departments(X and Z) but has however managed to present you with the

following records for its year ended 31st December, 2020

X Z

Capital balance. 1/1/20 50,000 40,000

Capital balance 31/12/20 100,000 80,000

Drawings 12,000 10,000

Capital Additions 24,000 18,000

Determine the Profit

Illustration Three

BUSACC keep its books on single entry basis. The following information relates to the business

for the years 2018 and 2019:

Particulars 1st February 2018 31st January 2019

₦ ₦

Motor car 2,000 2,000

Stock 1,000 1,250

Debtors 2,100 3,400

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 Cash 150 200

Creditors 1,750 1,900

Bills payable -- 300

Loan from olabisi -- 500

Investment -- 1,000

In addition, the business had drawings of N500 on account and also introduced N200 additional

capital.

You are required to (a) Ascertain:

i. Opening capital

ii. Closing capital

iii. Net profit or net loss.

iv. Prepare a balance sheet as at 31st January 2019.

Illustration Four

Rose Gloceries did not keep books in accordance with the double entry principles. However, it

has managed to keep the following record for the 2015 financial year.

Office Equipment 229,500

Delivery Van 1,995,000

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Inventory 244,500

Trade Debtors 355,500

Trade Creditors 259,500

Cash balance 150,000

As at the end of the financial year the business recorded

Office Equipment 580,500

Delivery Van 4,026,000

Inventory 580,500

Trade Debtors 658,500

Trade Creditors 272,100

Cash Balance 207,000

Rose also invested more capital of N2,250,000. She also made withdrawal of N37,500 monthly

for her personal expenses. You are to prepare the necessary accounts to show the business

transactions. Show the capital account, the profit for the period and statement of affairs for the

period