Single Entries & Incomplete Records

Question 1

Is it possible to have a single-entry system?

Answer 1

Yes

Question 2

Explain the meaning of a single entry

Answer 2

A single-entry is where a transaction is recorded on only either the debit or credit side, instead of both

Question 3

Name the records that are normally available for a single-entry business

Answer 3

Cash book
Records of debtors & creditors, suppliers’ statements and invoices
Bank statements, pop, deposit slips
Notes of non-current assets bought

Question 4

State the disadvantages of having a single-entry business

Answer 4

• Incomplete financial records
• Accuracy cannot be determined
• Calculations of accurate profits is mostly not possible
• Cannot accurately show the financial position for any period
• Opens opportunities for fraud
• not acceptable for government tax purposed

Question 5

Define a statement of affairs

Answer 5

The statement of affairs is prepared at the beginning & end of the financial period to determine the overall change in capital during the financial year

Question 6

Explain the differences between a statement of affairs and the statement of financial position

Answer 6

Statement of affairs:

1. Mixture of single-and double entry system
2. Capital is calculated using only a balancing figure
3. Not part of the financial statements of the business
4. Hypothetical figures
5. Prepared on either an opening or closing date
6. No specific format

Statement of financial position:

1. Drawn up from double entry records
2. Capital is entered from accurate entries in the ledger accounts
3. Part of the financial statements of the business
4. No estimated figures
5. Prepared on the last day of the financial year
6. Done in specific format

Question 7

How is total sales calculated?

Answer 7

Cash sales + credit sales

Question 8

How is total purchases calculated?

Answer 8

Cash purchases + credit purchases