INTRODUCTIONA single Entry System is a process of keeping and maintaining the account statement similar

to chequebook record and single line accounting entry is done in the journal (daybook) for

each transactions. All transaction is described as negative or positive introduction. A single

entry system is not in reality any organization. It is just a try to maintain book of transaction

that are happen in business concern by an individual who do not have knowledge of

accountancy. It is just an unfinished record which a small dealer is making who cannot open

an account writer for the similar.

Single entry system is difficult to define because, as a matter of fact there is exist no system

like single entry system of book keeping. Generally, it's a defective double entry system of

book keeping. Some system that comes short of complete double entry method is called

single entry system of book keeping. Usually, a single entry system is used by sole-

proprietorship.

A sole proprietorship, also known as the sole trader or simply a proprietorship, is a type

of business entity that is owned and run by one individual and in which there is no legal

distinction between the owner and the business.

The owner receives all profits (subject to taxation specific to the business) and has unlimited

responsibility for all losses and debts. Every asset of the business is owned by the proprietor

and all debts of the business are the proprietor's. It is a "sole" proprietorship in contrast

with partnership. 

i. There are many disadvanteges of keeping incomplete records such as

unscientific and unsystematic. The single entry system is unsystematic and

unscientific system of recording financial transactions. It does not have any set of

fixed rules and principals for recording and reporting the financial transactions.

Besides, it can cause of frauds and error. Since the single entry system of book-

keeping is incomplete, unscientific and unsystematic, it will not help us in

checking arithmetical accuracy of the books of accounts. Therefore, there is

always a possibility of committing frauds and errors in the books of accounts.

ii. Five accounting concepts that applicable with Zaki’s business are consistency,

dual entry system, matching, going concern, and periodicity. Consistency

means once Zaki adopts an accounting principle or method, he should continue to

use it until a demonstrably better principle or method comes along. Not following

the consistency principle means that his business could continually jump between

different accounting treatments of its transactions that makes its long-term

financial results extremely difficult to discern. Next, the applicable concept in

Zaki’s business is dual entry concept. Dual aspect is the foundation or basic

principle of accounting. It provides the very basis of recording the business

transaction in the accounts books. This concepts assume that each transactions

has a dual effect. The recording of transactions are involving of debit and credit

side in the the books of accounts. Besides, the other concept is periodicity.

Periodicity requires all the transactions are recorded in the books of accounts on

the assumption that profits on these transactions are to be ascertained for a

specified period of time. Thus, Zaki needs to prepare a statement of

comprehensive income and statement of financial position at regular time.

However, Zaki also needs to apply going concern concept. Going concern

concept is we assume that the business will continue to carry on its activities for

an indefinite period of time. Simply stated, it means that every business entity has

continuity of life. Thus, it will not be dissolved in the near future. This is an

important assumption of accounting, as it provides a basis for showing the value

of assets in the balance sheet. For example, a company purchases a plant and

machinery of RM 100, 000 and its life span is 10 years. According to this concept

every year some amount will be shown as expenses and the balance amount as

an asset. Thus, if an amount is spent on an item which will be used in business

for many years, it will not be proper to charge the amount from the revenues of

the year in which the item is acquired. Lastly, the applicable concept by Zaki’s

business is matching concept. Matching is the revenue and the expenses

incurred to earn the revenues must belong to the same accounting period. So

once the revenue is realised, the next step is to allocate it to the relevant

accounting period.

iii. The other method of depreciation of non-current asset that can be used by Zaki’s

business is reducing balance method. The reducing balance method is the

depreciation is charged at a fixed rate like straight line method (also known as

fixed installment method) but the rate percent is not calculated on cost of asset as

is done under fixed installment method. It is calculated on the book value of asset.

The book value of an asset is obtained by deducting depreciation from its cost.

The book value of asset gradually reduces on account of charging depreciation.

Since the depreciation rate per cent is applied on reducing balance of asset.

The differentiation between straight line method and reducing balance

method are :-

Straight Line Method Reducing Balance Method

The rate and amount of depreciation

remain the same each year.

The rate remains the same, but the

amount of depreciation diminishes

gradually.

Depreciation rate per cent is

calculated on cost of assets each

year

Depreciation rate per cent is

calculated on book value of asset.

The older the asset the larger the cost

of its repair but the amount of

depreciation remain the same each

year. Hence, the total of depreciation

and repairs increases every year.

This reduces annual profit gradually.

The amount of depreciation

decreases gradually, while the cost of

repairs increases. So, the total of

depreciation and repairs remain more

or less the same each year. Hence, it

causes little or no change in annual

profit or loss.

The differences between Straight Line Method and Sum of The Digits Method are :

Straight Line Method Sum of The Digits Method

The rate and amount of depreciation

remain the same each year