Which of the following is a major limitation of the Single Entry System? MCQ with Answer and Explanation

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Which of the following is a major limitation of the Single Entry System?

A. Trial balance cannot be prepared to check arithmetical accuracy

B. It is mandatory for multinational corporations

C. It requires highly qualified chartered accountants

D. It is too complex to maintain

Answer: Option A

Solution (By JKSSB Mock Tests)

Since both aspects (debit and credit) are not recorded, a Trial Balance cannot be extracted, making it vulnerable to undetected errors.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

A credit purchase of machinery worth ₹50,000 will:

A. Decrease assets and increase liabilities

B. Decrease assets and decrease capital

C. Increase assets and increase liabilities

D. Increase assets and decrease liabilities

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Correct Answer: Option C

Explanation:
Machinery (asset) increases, and a creditor liability increases. So assets and liabilities both increase.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

Under the concept of 'Social Return on Investment' (SROI), a ratio of 3:1 indicates:

A. Taxes are 300% of profit

B. Rs 1 of investment creates Rs 3 of social value

C. Rs 3 of investment creates Rs 1 of social value

D. Financial profit is 3 times the social profit

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Correct Answer: Option B

Explanation:
SROI expresses the social value created for every unit of currency invested. A 3:1 ratio means Rs 3 of value is created per Rs 1 invested.

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Question #3

In a partnership firm, a partner's current account is maintained to record:

A. Drawings, interest on capital, salary, share of profit, etc.

B. Only loans to partners

C. Only capital contributions

D. Only profits

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Correct Answer: Option A

Explanation:
Fixed capital method keeps capital account for initial capital and current account for all other adjustments.

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