Write a short note on single entry system of accounting.
Single entry system is an incomplete system of maintaining records of financial transaction. It does not record two aspects of every transaction. It maintains only personal account and cash book and ignores all other accounts. Under this system, the accounts maintained are not complete, and therefore are not reliable. Only small business organisation can follow single entry system.
For example, when an enterprise receives cash from bank as loan, it may record the cash inflow but there is no corresponding record of increase in liability i.e. repayment of the bank loan.
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