Solutions-Class-11-Commerce-Book Keeping and Accountancy-Chapter-10-Single Entry System-Maharashtra Board

The Single Entry System is an incomplete and unscientific form of the Double Entry System. It is a method of bookkeeping where, as a rule, only records of cash and personal accounts of debtors and creditors are maintained. It does not follow a proper set of rules.

A Statement of Affairs is a statement of Assets and Liabilities. It is prepared under the Single Entry System to find out the amount of opening or closing capital of a business. It is structurally similar to a Balance Sheet, with assets recorded on the right-hand side and liabilities on the left.

Under this system, Real and Nominal accounts are not maintained.

The Statement of Affairs is prepared to ascertain the capital balances (opening or closing).

Opening Capital is calculated using the following formula:

Opening Capital = Opening Assets – Opening Liabilities.

The accounts maintained are the Cash Book (Cash Accounts) and Personal accounts of debtors and creditors.

No, a Trial Balance cannot be prepared under this system because of the incomplete nature of the accounting information.

This system is generally followed by small-sized business concerns with a limited number of transactions and few assets and liabilities.

(1) A statement which is similar to Balance Sheet.

• Statement of Affairs (A Statement of Affairs is a statement of Assets and Liabilities and is described as being "as good as Balance Sheet").

(2) System of Accounting normally suitable to small business organization.

• Single Entry System (This system is useful and suitable for small size businesses where the number of transactions is small).

(3) A statement similar to Balance Sheet prepared to find out the amount of opening capital.

• Opening Statement of Affairs (This specific statement is prepared to find out the opening Capital balance).

(4) An excess of assets over liabilities.

• Capital (The difference between the total of Assets and the total of Liabilities is considered the amount of capital).

(5) Excess of closing capital over opening capital of proprietor under Single Entry System.

• Profit (If the Closing Capital is more than the Opening Capital, the difference is Profit).

(6) Name of method of accounting suitable to firms having limited transactions.

• Single Entry System (It is suitable for small concerns with a limited number of transactions).

(7) A System of accounting which is unscientific.

• Single Entry System (It is explicitly described as an incomplete and unscientific form of accounting).

(8) Further capital introduced by the proprietor in the business concern over and above his existing capital.

• Additional Capital (Also known as Further Capital, this refers to cash or assets brought into the business by the proprietor during the accounting year).

(a) Statement of affairs

(a) Opening Liabilities

(b) Deducted

(a) Sole traders

(d) Added

(a) Capital

(a) Profit

(c) ₹ 32,000

True. The sources state that the Single Entry System is an "incomplete and unscientific form," implying that the Double Entry System is the scientific and accurate method for recording business transactions.

True. A Trial Balance cannot be prepared because of the incomplete information of accounting, meaning the arithmetical accuracy of the books cannot be verified.

False. While they are structurally similar, they serve different purposes. A Statement of Affairs provides only an estimated financial position and is used to find capital balances, whereas a Balance Sheet is prepared to give a true and fair financial position.

True. The system is described as being "only useful to small business concerns" that have a limited number of transactions and few assets and liabilities.

True. Under this system, the Cash Book and personal accounts of debtors and creditors are maintained, while Real and Nominal accounts are not kept.

Disagree

Disagree

Agree

Disagree

Disagree

(1) Statement of Affairs is just like Balance Sheet.

(2) Under Single Entry System, Profit = Closing Capital Less Opening Capital.

(3) In order to find out the correct profit, drawings are added to the closing capital.

(4) In Double Entry Book Keeping System, in every business transactions we find two effects.

(5) The difference between Assets and Liabilities is called Capital.

(6) Single Entry System is more popular for small business concerns.

(7) Additional Capital introduced during the year is deducted from Closing Capital in order to find out the correct profit.

(8) Single Entry System is Suitable for small size business.

Odd One: Outstanding Expenses

Reason: In the Statement of Profit or Loss, Interest on Drawings, Undervaluation of Assets, and Prepaid Expenses are all items that are added to find the Net Profit. In contrast, Outstanding Expenses are deducted as an expense.

Odd One: Overvaluation of Liabilities

Reason: Interest on Capital, Interest on Loan, and Depreciation on Assets are all deducted from the Statement of Profit or Loss as expenses or losses. Overvaluation of Liabilities (which implies a decrease in liability value) is considered a gain and is added.

Odd One: Stock in Trade

Reason: In a Statement of Affairs, Creditors, Bills Payable, and Bank Overdraft are classified as Liabilities. Stock in Trade (or simply "Stock") is classified as an Asset.

-