Conversion of Single Entry into Double Entry System

(S R Patil) 

B Com -I sem-II

Financial Accounting 

Signal Entry 

(Conversion of Single Entry into Double Entry System)

In the Std. XII we have studied 'Single Entry System'. Under Single Entry System, two-fold effect for each transaction is not given and it is recorded only once in the ledger. As such a Trial Balance and in turn Trading and Profit & Loss A/e cannot be prepared. Profit or loss is ascertained by comparing capital at the commencement of the period and capital at the end of the period. Now we have to study how to convert Single Entry into Double Entry System.

Conversion of Single Entry into Double Entry System In order to convert Single Entry into Double Entry System the following steps are required to be taken. (i) To open all Real and Nominal Accounts in the books of accounts

(Personal Accounts and Cash Book are maintained and as such there is no

question of opening these accounts afresh.) (ii) From the Subsidiary Books, including Cash Book, and personal accounts posting is to be made to respective accounts (Real or Nominal). eg. the total of Purchase Books is to be debited to Purchases A/c (Posting to Supplier's Account is already made). Si.nilarly, credit purchase of machinery is to be posted to Machinery Account from the personal A/c of the seller. Payment of salaries is to be debited to Salaries A/c from the Cash Book. Thus, for each transaction double entry is to be completed i.e. second posting is to be made as only one aspect i.e. debit or credit is already recorded.

Important

In the examination a student is not supposed to open all such accounts. He is simply required to prepare Final Accounts from the items given in the Cash Book, Opening Balance Sheet, other information etc. However, he may be required to trace out the missing items such as Credit Sales, Credit, Purchases, Opening / Closing Balance of Debtors/Creditors, Opening Capital, Closing Balance of Bills Receivable / Bills Payable etc. by opening necessary accounts as under -

1. Total Debtors A/e to find out credit sales, or opening / closing balance of debtors, or cash received from debtors.

2. Total Creditors A/e to find out credit purchase, opening / closing balance of creditors etc. 3. Bills Receivable A/c to find out closing balance of Bills Receivable

or Bills Receivable received during the year. 4. Bills Payable A/c to find out closing balance of Bills Payable

or Bills Payable accepted during the year.