Single Entry System in Commerce

Introduction
Single Entry System is a method of bookkeeping under which only a one-sided record is maintained for each transaction. It is an incomplete and unscientific system of accounting.

Explanation
Under the Single Entry System, only personal accounts and cash book are maintained. The other accounts like sales, purchases, expenses, etc., are not recorded separately. The transactions are recorded in a format similar to a cash book with debit and credit columns. This system does not follow the double-entry system of accounting where both debit and credit aspects of a transaction are recorded.

Limitations
The Single Entry System has several limitations, including:

- Incomplete financial statements: As the system does not record all transactions, the resulting financial statements are incomplete and unreliable.
- Lack of accuracy: The system heavily relies on estimates, which may not reflect the true financial position of the business.
- No control over fraud: The system does not provide adequate control over fraudulent activities like embezzlement, misappropriation, etc.
- No clear understanding of profits and losses: As the system does not record all transactions, it is difficult to determine the true profit or loss of the business.

Conclusion
In conclusion, the Single Entry System is an incomplete and unscientific system of accounting. It is not a reliable method for businesses to maintain their financial records as it does not provide a comprehensive view of their financial position. To ensure accurate and reliable financial statements, businesses should adopt the double-entry system of accounting.