Which of the following entities generally prepare their books of accounts under single entry system?
Last updated Jun 24, 2026
Correct Answer:
Option B —
Sole traders
The Single Entry System (often referred to as "Accounts from Incomplete Records") is an unscientific and informal method of bookkeeping where only one side of a transaction is recorded (usually just Cash and Personal accounts).
Sole Traders and Small Partnerships: These entities often use the single entry system because it is cost-effective, simple to maintain, and does not require specialized accounting knowledge. Since their scale of operation is small, they may not need the complexity of a full double-entry system.
Joint Stock Companies (A): Are legally required by the Companies Act to maintain books under the Double Entry System to ensure transparency for shareholders.
Government Organizations (C): Follow strict accounting standards and accrual/cash-based double-entry systems for public accountability.
Not-for-profit Organizations (D): Usually maintain a Receipt and Payment Account, Income and Expenditure Account, and a Balance Sheet, which are based on double-entry principles to track fund usage.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
