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2nd year accounting Notes for I.

Com Part II Single Entry


System Chapter 2

SINGLE ENTRY SYSTEM


1.

What is single entry system of book keeping?


Single entry system may be defined as a system in which accounting records are not kept strictly
according to the double entry system of book keeping. 2. Write down the formula for determining the net
profit under net worth method?
The formula for determining the net income may be put as follows
Net income
=
capital at the end (Ending Capital
(+)
Drawings
(-)
Additional capital (Fresh capital) introduced
(-)
Capital at the beginning (Beginning capital)
3. Define characteristics of single entry system?

It is suitable for the small businesses

Only personal account are kept

This system is flexible

4.

What are the limitations/defects of single entry system?


The defects of this system may be summed up as follows.
Under this system only partial and incomplete record is kept because two fold aspects of
transactions are generally ignored.

As the two fold aspects of every transaction are not recorded a trial balance cannot be drawn up
to test the arithmetical accuracy of the record

As nominal accord are not maintained a profit and loss account cannot be prepared for want of
information regarding the various income and expenditures

5.

As no real account are maintained the preparation of a balance sheet is not possible

Write down the fundament balance sheet equation?


Assets = Liabilities + Owners Equity 6. How many methods are for preparing final account from single
entry system? There are two methods for preparing the final account
1) First method of statement of affairs
2) Second method conversion into double entry system
7. What is statement of affairs?It is statement of assets and liabilities (including capital) prepared under the
single entry system.8. Define balance sheet? It is statement of assets and liabilities (including capital)
prepared under the Double entry system.9. What is major difference between single entry system and
double entry system? Under entry system both debit and credit aspects of all the transactions are
recorded whereas under single entry system some transactions are not recorded at all while some
transactions are recorded in only one of their aspect either debit aspect or credit aspect ( only one aspect
of transaction). 10. What will be the capital of proprietor, in his assets are of Rs. 87000 and liabilities are
of Rs. 20000? Assets-Liabilities = Capital 87000-20000= 67000 11. What shall be the profits of the
concern in beginning capital is Rs 8000 and capital at the end Rs, 9000 drawing during the year is Rs
1800 fresh capital Introduce Rs 500?

12. Calculate the missing figures profits made during the year Rs, 2400 Drawing Rs.1200 capital at the end
Rs 8000 opening capital? Fresh capital introduced during the year Rs 2000?
Net income = capital at the end (+) Drawings (-) Additional capital (-) Capital at the beginning
2400 =
8000 + 1200-2000-Capital at the beginning
Capital at the beginning = 8000 + 1200-2000-2400 = 4800
13. Calculate the Net income/Loss
Opening capital Rs. 5000, capital introduced Rs.1000
Net income = capital at the end (+) Drawings (-) Additional capital (-) Capital at the beginning
Net Loss = 0+0-1000-5000= -6000
14. Calculate the drawing s during the year:
Capital in the beginning Rs, 20000
Capital introduced Rs, 25000
Profit made during the year Rs.15000
Net income = capital at the end (+) Drawings (-) Additional capital (-) Capital at the beginning
15000 = 0+Drawings-25000-20000
Drawings
=
15000+25000+20000
= 60000

15. How Many methods are for conversion from single entry to double entry?
Prospective ( on and from the date on which arrangements are made for conversion)
Retrospective (on and from a date before the date of conversion) 16. In case of conversion of single
entry system into double entry. What necessary information / item are required for the preparation of
trading account?
In order to prepare trading account following informations / items are required
Opening stock + purchase + direct expenses-sales- closing stock 17. In case of conversion of single
entry system into double entry. What necessary information / item are required for the preparation of profit
and loss account? The following item are required in order to prepare the profit and loss account Indirect
expense- other incomes 18. In case of conversion of single entry system into double entry. What
necessary information / item are required for the preparation balance sheet?
Following information are required in order to prepare the balance sheet
All assets
All liabilities
Opening capital
Profit or loss of the year

19. How to prepare to Total debtors accounts?


Total debtors account
cash received from debtor during the
Opening balance
period
credit sales
B/R Received
B/R dishonored
Return Inward
Discount allowed
Bad debts
Closing balance
20. How to prepare total creditors accounts?
Total Creditor account

Cash paid to creditors


B/P granted
Return outward
Discount received
Closing balance

Opening Balance
Credit Purchases
B/P dishonored

nd year accounting Notes for I.Com Part II Non Trading


Concern Chapter 1
CHAPTER NO.1

NON TRADING
CONCERN

1.What is meant by non trading concerns? Individuals or institutions with activities other than trade and
their primary object is not to earn profit are known as non trading concerns. Like hospitals, libraries and
colleges. 2. What is receipt & payment account? A receipts & payments account is summarized cash
book for given period. Receipts are shown on the debit side and payments are shown on credit side
without any distinction between capital and revenue. 3. What is income and expenditure account? The
account through which surplus or deficits of a non trading concern is ascertained. This account is credited
with all earning and debited with expenses is called income and expenditure account.4. What is major
difference between receipts or payment account and an income and expenditure account?

Receipts and payments account only a summary of the cash transactions whereas income & expenditure
accounts a comparable account of a profit and loss account which shows the incomes expenses and
surplus / deficit for the period. 5. What are key statements prepared in accounts of non profit seeking
organization?
The following three key statements are prepared at the end of year
Receipts and payments accounts

Income and expenditure accounts (Profit and loss account)

Balance sheet

6. What are key statements prepared in accounts of profit seeking organization?


The following key statements are prepared at the end of year
Trial Balance

Trading and Profit & loss account

Balance sheet
7. Define legacy?
The amount given to a non trading concern as per the will of deceased person is known as legacy. It
should be treated as capital receipts and included capital fund account.8. Define donations?
Donation is the amount received from some person, firm, company or any other body by way of gift.
if donations are for specified purpose then it should be treated as capital expenditures and otherwise
credited to income and expenditure account 9. What is subscription?
The amount paid by the member annually to keep their membership alive is known as subscription.

It should be credited to income and expenditure account.


10. What is special subscription?It is the special subscriptions collected form the members who
participate in a particular activity because of the cost involved in providing these may vary considerably. It
should be credited to income and expenditure account.11. Define life membership fee? This is a system
where by a member pays a lump sum and then becomes a member of the whole life. Life member not
required to pay the annual membership fees. As life membership fees is a substitute for annual
membership fees only fair portion is to considered in income and expenditure account. If not mentioned
treat all the amount.
12. Define entrance fees?At the time of admission every new member is to pay specific fee in addition to
subscription called entrance fees. It should either treat as capital or revenue receipts but normally treat as
revenue receipts 13. What is sale of news paper? As the old newspaper or magazines and other things
are disposed off every year, It should be credited in income and expenditure account 14. Define sale of
sports material? Sale of sports material is a regular function of club, It should be credited in income and
expenditure account 15. What is capital fund? The difference between total assets over total external
liabilities in case of non trading concern is called capital fund. It should not considered in income and
expenditure account 16. What is honorarium?
The amount paid to the person who is not the employee of the organization is said to be honorarium
person may be invited to deliver lectures or artists may be invited to give their performance
It should be debited in income and expenditure account