Commerce Exam > Commerce Questions > A limited company cannot maintain its account...
Start Learning for Free
A limited company cannot maintain its accounts under Single entry system because
- a)Follow accrual basis of accounts
- b)Legal restrictions
- c)Both
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
A limited company cannot maintain its accounts under Single entry syst...
c) Both. Limited companies are required to follow the accrual basis of accounting, which means that they need to record all revenues and expenses when they are earned or incurred, regardless of when payment is received or made. This is in contrast to the cash basis of accounting, which records revenues when payment is received and expenses when payment is made. The accrual basis of accounting requires the use of double-entry accounting, which is not possible under the single entry system. Additionally, there may be legal restrictions on the use of the single entry system for limited companies in some countries.
Free Test
FREE
| Start Free Test |
Community Answer
A limited company cannot maintain its accounts under Single entry syst...
Explanation:
A limited company cannot maintain its accounts under the Single entry system due to the following reasons:
1. Follow accrual basis of accounts:
Under the single entry system, the accounts are maintained on a cash basis, which means only cash receipts and payments are recorded. However, limited companies are required to maintain their accounts on an accrual basis. The accrual basis of accounting records transactions when they occur, rather than when cash is received or paid. This ensures a more accurate representation of the company's financial position and performance.
2. Legal restrictions:
Limited companies are subject to various legal and regulatory requirements, including the Companies Act and accounting standards. These regulations require companies to maintain proper books of accounts and prepare financial statements in a prescribed format. The single entry system does not provide the necessary level of detail and accuracy required by these regulations. Therefore, limited companies are not allowed to maintain their accounts under the single entry system.
Conclusion:
In conclusion, a limited company cannot maintain its accounts under the single entry system due to the need to follow the accrual basis of accounts and legal restrictions imposed by the Companies Act and accounting standards. By maintaining accounts on an accrual basis and following the prescribed accounting standards, limited companies can ensure accurate financial reporting and compliance with legal requirements.
A limited company cannot maintain its accounts under the Single entry system due to the following reasons:
1. Follow accrual basis of accounts:
Under the single entry system, the accounts are maintained on a cash basis, which means only cash receipts and payments are recorded. However, limited companies are required to maintain their accounts on an accrual basis. The accrual basis of accounting records transactions when they occur, rather than when cash is received or paid. This ensures a more accurate representation of the company's financial position and performance.
2. Legal restrictions:
Limited companies are subject to various legal and regulatory requirements, including the Companies Act and accounting standards. These regulations require companies to maintain proper books of accounts and prepare financial statements in a prescribed format. The single entry system does not provide the necessary level of detail and accuracy required by these regulations. Therefore, limited companies are not allowed to maintain their accounts under the single entry system.
Conclusion:
In conclusion, a limited company cannot maintain its accounts under the single entry system due to the need to follow the accrual basis of accounts and legal restrictions imposed by the Companies Act and accounting standards. By maintaining accounts on an accrual basis and following the prescribed accounting standards, limited companies can ensure accurate financial reporting and compliance with legal requirements.
|
Explore Courses for Commerce exam
|
|
Top Courses for CommerceView all
A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer?
Question Description
A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer?.
A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer?.
Solutions for A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A limited company cannot maintain its accounts under Single entry system becausea)Follow accrual basis of accountsb)Legal restrictionsc)Bothd)None of theseCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup