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    Single Entry System

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    Kaila Mae Tan Du
    The document describes the single entry system of accounting which records only basic transactions like cash, accounts receivable, accounts payable, property and taxes paid. The single entry method calculates net income or loss as the difference between capital at the beginning and end of the year after adjusting for withdrawals, investments, and dividends. Financial statements are prepared by converting cash basis records to accrual basis using formulas to calculate revenues, expenses, and the statement of financial position by counting assets and liabilities.

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    Single Entry System

    Uploaded by

    Kaila Mae Tan Du
    41 views2 pages
    The document describes the single entry system of accounting which records only basic transactions like cash, accounts receivable, accounts payable, property and taxes paid. The single entry method calculates net income or loss as the difference between capital at the beginning and end of the year after adjusting for withdrawals, investments, and dividends. Financial statements are prepared by converting cash basis records to accrual basis using formulas to calculate revenues, expenses, and the statement of financial position by counting assets and liabilities.

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    Single entry system

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    The document describes the single entry system of accounting which records only basic transactions like cash, accounts receivable, accounts payable, property and taxes paid. The single entry method calculates net income or loss as the difference between capital at the beginning and end of the year after adjusting for withdrawals, investments, and dividends. Financial statements are prepared by converting cash basis records to accrual basis using formulas to calculate revenues, expenses, and the statement of financial position by counting assets and liabilities.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    41 views2 pages

    Single Entry System

    Uploaded by

    Kaila Mae Tan Du
    The document describes the single entry system of accounting which records only basic transactions like cash, accounts receivable, accounts payable, property and taxes paid. The single entry method calculates net income or loss as the difference between capital at the beginning and end of the year after adjusting for withdrawals, investments, and dividends. Financial statements are prepared by converting cash basis records to accrual basis using formulas to calculate revenues, expenses, and the statement of financial position by counting assets and liabilities.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

     Single entry system

    o System of record keeping in w/c transactions are not analyzed and recorded in the
    double entry framework
    o When records are incomplete
    o Records maintained are represented only by the so-called “bare essentials”
    o Normally includes a record of cash, AR, AP, PPE and taxes paid
    o Major record under the single entry system: cashbook
     Maintained showing all receipts and disbursements
    o And because no specific accounts for the receipts and disbursements are debited or
    credited
     Only a description is made
     With respect to AR and AP – only a list of customers and creditors is made with
    their corresponding balances
     Single entry method
    o Compare the capital or retained earnings at the beginning of the year and capital and
    retained earnings at the end of the same year after taking into consideration
    withdrawals or dividends and additional investments
     Difference is either net income or net loss
    o Net assets approach or capital maintenance approach
     Formula for proprietorship or partnership
    Capital, end of the year XX
    Add: Withdrawals XX
    Total XX
    Less: Capital, beginning of year XX
    Additional Investments XX XX
    Net income (loss) XX

     Formula for corporation


    Retained earnings, end XX
    Add: Dividends declared or paid XX
    Other items that decrease the retained earnings
    But not profit or loss XX XX
    Total XX
    Less: RE, beg. XX
    Other items that increase retained earnings but not
    Profit or loss XX
    Net income (loss) XX

     Increase in assets and decrease in liabilities


    o Increase net assets
     Increase in liabilities and decrease in assets
    o Decrease net assets
     Dividend paid
    o Added back to net assets because it decreased net assets but not representing profit or
    loss
     Increase in share capital and increase in share premium
    o Deducted because they increased net assets but not representing profit or loss
     Preparation of Financial Statements
    o Involves the computation of individual revenue and expense balances by reference to
    cash receipts and disbursements and the change in assets and liabilities
    o Formulas used in converting cash basis to accrual basis of accounting
     Involve the computation of
     Sales
     Purchases
     Income other than sales
     Expenses in general
    o Statement of Financial position
     Involves inventorying, counting and verification procedures to determine the
    nature and amount of most assets and liabilities
    o Accounts and notes receivable
     Summarized from unpaid sales invoices and promissory notes
    o Merchandise on hand, supplies and other inventories
     Could be counted and their cost determined from purchase invoices
    o Cost of PPE
     Established by reference to deeds of sale and other documents evidencing
    ownership of title
    o Accounts and notes payable
     Determined from purchase invoices, memoranda, correspondence and even
    consultation with creditors
    o Ownership equity or capital
     Difference between the value assigned to assets and liabilities

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