Question

The method adopted by Panchayati Raj Institutions for maintaining their accounts is
1. Accrual Based
2. Single Entry
3. Double Entry
4. Both (2) and (3)

Answer 1

Correct Answer - Option 4 : Both (2) and (3)

The correct answer is Both (2) and (3).

• The method adopted by Panchayati Raj Institutions for maintaining their accounts is both Single Entry and Double Entry.

• Single Entry Accounting System: 
  • Single Entry accounting refers to any system other than the double-entry accounting system.
  • In this, the dual aspect of every transaction is not maintained and entries are recorded in 1, 2 or more registers as needed.
  • The primary record in single-entry bookkeeping is the cash-book with separate records/registers for amounts payable, receivable and other transactions such as inventory and assets etc.
• Double Entry System:
  • Double Entry Accounting System recognizes that every transaction has a dual effect.
  • There are two sides to every transaction.
  • If one account is debited, any other account must be credited.
  • Every transaction affects at least two accounts in opposite directions.
•  Both the entry systems are used in Panchayati Raj Institutions.