This document provides information about single entry bookkeeping systems. It defines single entry as an informal system without defined rules that is used by small sole proprietor businesses. Transactions are not systematically recorded. The document discusses two methods for single entry - the net worth method which uses statements of affairs to calculate profit or loss, and the conversion method which converts single entry records into a double entry format. It provides examples of accounting questions involving single entry systems, showing how to prepare statements of profit and loss and statements of financial position from incomplete single entry records.

1. M. REKHA

2. MEANING
 The single entry is adopted by small traders, especially
sole traders, who prefer to maintain personal accounts
and other accounts are not taken into account
 This system is not systematic. No define rules and
procedures are adopted, so they are flexible according
to the needs of the business
 The transaction of the business are mixed in cash
books with personal transactions
 This system lacks in uniformity since they differ from
one business to another business

3. DEFINITION
 According to R.N.Carter, “ Single entry cannot be
termed as a system, as it is not based on any scientific
system, like double entry system. For this purpose,
single entry is now – a- days known as preparation of
accounts from incomplete records”

4. METHODS OF SINGLE ENTRY
1. Net worth Method
It is called “ Statement of Affairs Method”. Under
this method two statements of affairs, one at the
beginning of the year and the other at the end of the
year are prepared. Statement of affairs is prepared in
order to calculate the capital. The difference between
the opening capital and closing capital can be either
profit or loss. These two statements are in lieu of
balance sheet in double entry system

5. STATEMENT OF AFFAIRS OF …. AS ON…..
LIABILITIES Rs. Assets Rs.
Sundry Creditors XXX Cash in hand XXX
Bank overdraft XXX Cash at bank XXX
Loan XXX Sundry debtors XXX
Bills payable XXX Bills receivable XXX
Outstanding expenses XXX Prepaid expenses XXX
Income received in advance XXX Accrued income XXX
Capital XXX Land and building XXX
Plant and machinery XXX
Furniture and fixtures XXX
Leasehold properties XXX
Good will XXX
XXXX XXXX

6. STATEMENT OF PROFIT OR LOSS FOR THE YEAR…….
PARTICULARS Rs. Rs.
Capital at the end (Closing Capital) XXX
Add: Drawings made during the year ( Cash and Goods) XXX
XXX
Less: Capital at the beginning (Opening Capital)
Additional Capital
XXX
XXX XXX
Profit or Loss of the year XXX

7. QUESTION NO : 1
Calculate the capital at the beginning of the year
Rs.
Capital at the end of the year 35000
Drawings during the year 5000
Capital introduced during the year 2500
Profit during the year 10000
QUESTION NO: 2
Ganesh who keeps his books on single entry, tells you that his capital on 31st December 1995
is Rs. 37400 and his capital on 1st January 1995 was Rs. 38400. he further informs you that
during the year he withdrew for his household purposes Rs. 16840. he once sold his
investment of Rs. 4000 at 2% premium and brought that money into the business.
You are required to prepare a statement of profit or loss

8. ANSWER NO : 1
STATEMENT OF PROFIT OR LOSS FOR THE YEAR…….
PARTICULARS Rs. Rs.
Closing Capital 35000
Add: Drawings 5000
40000
Less: Capital introduced
Profit during the year
2500
10000 12500
Opening Capital 27500

9. ANSWER NO : 2
STATEMENT OF PROFIT OR LOSS OF MR. GANESH FOR THE YEAR 1995
PARTICULARS Rs. Rs.
Closing Capital 37400
Add: Drawings 16840
54240
Less: Opening Capital
Additional Capital
38400
4080 42480
Profit for the year 1995 11760

10. QUESTION NO : 3
Mr. Janaki Raman keeps his books by single entry. He started business on 1st January 2006
with Rs. 100000. on 31st December 2006 his position was as under.
Assets Rs. LIABILITIES Rs.
Cash in hand 2500 Sundry Creditors 20000
Cash at bank 5000 Bills payable 2500
Furniture 12500 Outstanding Creditors 2500
Plant 50000
Sundry debtors 25000
Stock 45000
Bills receivable 5000
Ascertain the profit or loss made by Mr. Janaki Raman during 2006.

11. STATEMENT OF AFFAIRS OF MR. JANAKI RAMAN AS ON 31.12.2006
LIABILITIES Rs. Assets Rs.
Sundry Creditors 20000 Cash in hand 2500
Bills payable 2500 Cash at bank 5000
Outstanding Creditors 2500 Furniture 12500
Capital 120000* Plant 50000
Sundry debtors 25000
Stock 45000
Bills receivable 5000
145000 145000
STATEMENT OF PROFIT OR LOSS OF MR. JANAKI RAMAN FOR THE YEAR 2006
PARTICULARS Rs.
Closing Capital 120000
Less: Opening Capital 100000
Profit for the year 2006 20000

12. QUESTION NO :4
Ajay keeps his books by the single entry method. His position on 31.12.1977 and 31.12.1978
was as follows:
1977
Rs.
1978
Rs.
Cash in hand 250 300
Cash at bank 2750 2200
Stock in trade 21000 18000
Sundry debtors 7500 12000
Fixtures & fittings 1750 1575
Machinery 15000 25000
Sundry creditors 18000 23000
During the year, Ajay introduced Rs. 5000 as further capital in the business and withdrew
Rs. 600 p.m.
From the above, prepare a statement showing the profit or loss made by him for the year
ended 31.12.1978.

13. STATEMENT OF AFFAIRS OF MR. AJAY AS ON 31.12.1977
STATEMENT OF AFFAIRS OF MR. AJAY AS ON 31.12.1978
LIABILITIES Rs. Assets Rs.
Sundry Creditors 18000 Cash in hand 250
Capital 30250 Cash at bank 2750
Stock in trade 21000
Sundry debtors 7500
Fixtures & fittings 1750
Machinery 15000
48250 48250
LIABILITIES Rs. Assets Rs.
Sundry Creditors 23000 Cash in hand 300
Capital 36075 Cash at bank 2200
Stock in trade 18000
Sundry debtors 12000
Fixtures & fittings 1575
Machinery 25000
59075 59075

14. STATEMENT OF PROFIT OR LOSS OF MR. AJAY FOR THE YEAR 1977-1978
PARTICULARS Rs. Rs.
Closing Capital 36075
Add: Drawings 7200
43275
Less: Opening Capital
Additional Capital
30250
5000 35250
Profit for the year 1978 8025

15. QUESTION NO: 5
A trader has not kept proper books of accounts. The following balances are placed before
you and you are required to prepare a statement of gross profit and net profit for the year
ended 31st March 1971, and a statement of affairs as at that date.
1.4.1970
Rs.
31.3.1971
Rs.
Cash in hand 5350 5400
Bank overdraft 45000 40000
Stock in trade 59350 62200
Sundry creditors 38600 37200
Sundry debtors 30200 29800
Bills receivable 42400 40800
Land & buildings 53000 53000
Furniture 4600 4600
Bills payable 62000 58000
Drawings during the year amounted to Rs. 6000. depreciation is to be calculated on land
and buildings at 2% and on furniture and fittings at 10%. Provide for doubtful debts at
2 ½ %

16. STATEMENT OF AFFAIRS AS ON 1.4.1970
LIABILITIES Rs. Assets Rs.
Bank overdraft 45000 Cash in hand 5350
Sundry Creditors 38600 Stock in trade 59350
Bills payable 62000 Sundry debtors 30200
Opening Capital 1.4.1970 49300 Bills receivable 42400
Land & Buildings 53000
Furniture 4600
194900 194900

17. LIABILITIES Rs. Assets Rs.
Bank overdraft 40000 Cash in hand 5400
Sundry Creditors 37200 Stock in trade 62200
Bills payable 5800 Sundry debtors
Less: Depreciation
( 29800 * 2.5 / 100 %)
29800
745 29055
Closing Capital 31.3.1971 58335 Bills receivable 40800
Land & Buildings
Less: Depreciation
( 53000 * 2 / 100 %)
53000
1060 51940
Furniture
Less: Depreciation
( 4600 * 10 / 100 %)
4600
460 4140
193535 193535
STATEMENT OF AFFAIRS AS ON 31.3.1971

18. STATEMENT OF PROFIT OR LOSS FOR THE YEAR 1970-1971
PARTICULARS Rs. Rs.
Closing Capital 58335
Add: Drawings 6000
64335
Less: Opening Capital 49300 49300
Profit for the year 1970-71 15035

19. QUESTION NO: 6
From the following details, prepare a statement of profit or loss for the year ended
December 31, 1989.
1.1.89 Rs. 31.12.89 Rs.
Machinery 15000 20000
Furniture 2000 2000
Debtors 90000 70000
Cash 2700 4800
Prepaid expenses 500 -
Accrued income - 800
Outstanding expenses 3000 5300
Provide 10% depreciation on machinery and furniture and 5% for bad debts on sundry
debtors. Interest on capital to be provide at 6% per annum. After 3 months from the
beginning of the year the proprietor had to bring in Rs. 5000 by way of additional capital.
He drew salary at Rs. 500 p.m. In addition, he drew Rs. 3000 in anticipation of profits. Rs.
2000 income – tax was paid.

20. STATEMENT OF AFFAIRS AS ON 1.1.1989
LIABILITIES Rs. Assets Rs.
Outstanding expenses 3000 Machinery 15000
Capital as on 1.1.1989 107200 Furniture 2000
Debtors 90000
Cash 2700
Prepaid expenses 500
110200 110200

21. STATEMENT OF AFFAIRS AS ON 31.12.1989
LIABILITIES Rs. Assets Rs. Rs.
Outstanding expenses 5300 Machinery
Less: Depreciation
(20000*10%)
20000
2000 18000
Capital as on 31.12.1989 86600 Furniture
Less: Depreciation
(2000*10%)
2000
200 1800
Debtors
Less: Bad debts
(70000*5%)
70000
3500 66500
Cash 4800
Prepaid expenses 800
91900 91900

22. STATEMENT OF PROFIT OR LOSS FOR THE YEAR 1989
PARTICULARS Rs. Rs.
Closing Capital 86600
Add: Drawings
Salary (500 * 12)
Income - Tax
3000
6000
2000 11000
97600
Less: Opening Capital
Interest (107200* 6%)
Additional capital
Interest (5000 * 6% * 9/12)
107200
6432
5000
225 118857
Loss for the year 1989 21257

23. 2. Conversion Method
 This method does not provide clear information about the
real business situation. To overcome this, business keeping
books under single entry would wish to convert the books
from single entry system into double entry system. If the
business keeps its records in double entry system it enjoys
various benefits like better management, tax benefits,
obtaining loans etc. so they go for converting their single
entry to the double entry form of book keeping. Conversion
is done by taking the available record and information from
the incomplete records and finding out those missing
information which are required to prepare the final
statements by double entry system. After conversion all the
transactions will be recorded according to the double entry
system.

24. QUESTION NO :1
From the following details find out the credit purchases and total purchases:
Rs. Rs.
Cash purchases 29000 Bills payable paid during the
year
10500
Bills payable (opening) 7500 Purchase returns 1500
Bills payable ( closing) 2500 Allowances from creditors 800
Creditors (opening) 20000 Bills payable dishonored 300
Creditors (closing) 18000
Cash paid to creditors 25000

25. TOTAL CREDITORS A/C
Rs. Rs.
To Cash 25000 By Balance b/d 20000
To Purchase return 1500 ByB /P A/c (dishonored) 300
To Allowances 800 By Purchase ( credit) 30800
To Bills payable A/c 5800
To Balanced c/d 18000
51100 51100
BILLS PAYABLE A/C
Rs. Rs.
To Creditors A/c (B/P
dishonored)
300 By Balance b/d 7500
To Cash 10500 By Su ndry Creditors
(acceptance given during the
year)
5800
To Balanced c/d 2500
13300 13300
Total purchases = Credit purchases + Cash purchase
= 30800 + 29000 = Rs. 59800

26. QUESTION NO: 2
Mrs. James commenced business as a cloth merchant on 1.1.2009 with a capital of Rs.
10000. On the same day she purchased furniture for cash Rs. 3000. From the
following particulars obtained from her books kept by single entry system, you are
required to prepare a Trading and P&L A/c and Balance sheet as on 31.12.2009.
Rs.
Sales (including of cash Rs. 7000) 17000
Purchase (including of cash Rs. 4000) 15000
Mrs. James’s drawings 1200
Salaries 2000
Bad debts written off 500
Business expenses 700
Mrs. James took cloth worth Rs. 500 from the shop for private use and paid Rs. 200 to
her son but omitted to record these transactions in her books. On 31.12.2009 her
sundry debtors were Rs. 5200 and sundry creditors Rs. 3600. Stock in hand on
31.12.2009 Rs. 6500

27. DEBTORS A/C
Rs. Rs.
To Balance b/d - By cash or bank A/c 4300*
To Credit sales 10000 By Bad debts 500
By Balanced c/d 5200
10000 10000
BANK AND CASH A/C
Rs. Rs.
To Capital 10000 By Purchases 4000
To Sales 7000 By Creditors 7400
To Debtors 4300 By Furniture & fitting 3000
By Drawing (1200 + 200) 1400
By Salaries 2000
By Business expenses 700
By Balanced c/d 2800*
10000 10000

28. CREDITORS A/C
Rs. Rs.
To Bank A/c 7400* By Balanced b/d -
To Balanced c/d 3600 By credit purchases 11000
11000 11000
TRADING AND PROFIT & LOSS A/C OF MRS. JAMES FOR THE YEAR ENDING31.12.1993
PARTICULARS Rs. Rs. PARTICULARS Rs. Rs.
To Opening Stock - By Sales 17000
To Purchase
Less : cloth worth
15000
500 14500
By Closing stock 6500
To Gross Profit 9000*
23500 23500
By Gross Profit 9000
To Salaries 2000
To Bad debts 500
To Business expenses 700
To Net Profit 5800*
9000 9000

29. LIABILITIES Rs. Rs. ASSETS Rs. Rs.
Creditors 3600 Bank 2800
Capital
Less: Drawings (1200 +200
+500)
Add: Net profit
10000
1900
8800
5800 13900
Furniture & fittings 3000
Closing stock 6500
Debtors 5200
17500 17500
BALANCE SHEET OF MRS. JAMES AS ON 31.12.1993

30. THANK
YOU