NCERT Class 11 Accountancy Accounts from Incomplete Records

 NCERT Class 11 Accountancy - Accounts from Incomplete Records. Download NCERT Chapters and Books in pdf format. Easy to print and read. Copies of these textbooks may be downloaded and used as textbooks or for reference. Refer to other chapters and books at other links (NCERT now providing you soft copies of all textbooks of all subjects from class first to twelfth online). 

Accounts from Incomplete Records

We have so far studied accounting records of firms, which follow the double entry system of book keeping. This gives us an impression that all business units follow this system. However, in practice, all firms do not maintain accounting records strictly as per the double entry system. Many small size enterprises keep incomplete records of their transactions. But, they also have to ascertain the profit or loss for the year and the financial position of the firm as at the end ofthe year. This chapter deals with the ascertainment of profit or loss and financial position of the firm that have not been maintaining records as per double entry bookkeeping or whose records are otherwise incomplete.

11.1 Meaning of Incomplete Records

Accounting records, which are not strictly kept according to double entry system are known as incomplete records. Many authors describe it as single entry system. However, single entry system is a misnomer because there is no such system of maintaining accounting records. It is also not a ‘short  cut’ method as an alternative to double entry system. It is rather a mechanism of maintaining recordswhereby some transactions are recorded with proper debits and credits while in case of others, either one sided or no entry is made. Normally, under this system records of cash and personal accounts of debtors and creditors are properly maintained, while the information relating to assets, liabilities, expenses and revenues is partially recorded. Hence, these are usually referred as incomplete records.

11.1.1 Features of Incomplete Records

In complete records may be due to partial recording of transactions as is the case with small shopkeepers such as grocers and vendors. In case of large sized organisations, the accounting records may be rendered to the state of incompleteness due to natural calamity, theft or fire. The features of incomplete records are as under :

(a) It is an unsystematic method of recording transactions.

(b) Generally, records for cash transactions and personal accounts are properly maintained and there is no information regarding revenue and/ or gains, expenses and/or losses, assets and liabilities.

(c) Personal transactions of owners may also be recorded in the cash book.

(d) Different organisations maintain records according to their convenience and needs, and their accounts are not comparable due to lack of uniformity.

(e) To ascertain profit or loss or for obtaining any other information, necessary figures can be collected only from the original vouchers suchas sales invoice or purchase invoice, etc. Thus, dependence on original vouchers is inevitable.

(f) The profit or loss for the year cannot be ascertained under this system with high degree of accuracy as only an estimate of the profit earned or loss incurred can be made. The balance sheet also may not reflect thecomplete and true position of assets and liabilities.

11.2 Reasons of Incompleteness and its Limitations

It is observed, that many businessmen keep incomplete records because of the following reasons :

(a) This system can be adopted by people who do not have the proper knowledge of accounting principles;

(b) It is an inexpensive mode of maintaining records. Cost involved is low as specialised accountants are not appointed by the organisations;

(c) Time consumed in maintaining records is less as only a few books are maintained;

(d) It is a convenient mode of maintaining records as the owner may record only important transactions according to the need of the business.

However, the mechanism of incomplete records suffers from a number of limitations. This is due to the basic nature of this mechanism. Broadly speaking, unless a systematic approach to maintenance of records is followed, reliable financial statements cannot be prepared.

The limitations of incomplete records are as follows :

(a) As double entry system is not followed, a trial balance cannot be prepared and accuracy of accounts cannot be ensured.

(b) Correct ascertainment and evaluation of financial result of business operations can not be made.

(c) Analysis of profitability, liquidity and solvency of the business cannot be done. This may cause a problem in raising funds from outsiders and planning future business activities.

(d) The owners face great difficulty in filing an insurance claim with an insurance company in case of loss of inventory by fire or theft.

(e) It becomes difficult to convince the income tax authorities about the reliability of the computed income Questions for Practice


Short Answers

1. State the meaning of incomplete records?

2. What are the possible reasons for keeping incomplete records?

3. Distinguish between statement of affairs and balance sheet.

4. What practical difficulties are encountered by a trader due to incompleteness of accounting records?

Long Answers

1. What is meant by a ‘statement of affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?

2. ‘Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader’? Do you agree? Exlain.

3. Explain how the following may be ascertained from incomplete records:

  (a) Opening capital and closing capital

  (b) Credit sales and credit purchases

  (c) Payments to creditors and collection from debtors

  (d) Closing balance of cash. Numerical

Please refer to attached file for NCERT Class 11 Accountancy - Accounts from Incomplete Records



Click to View or Download pdf file
Click for more Accountancy Study Material

Latest NCERT & CBSE News

Read the latest news and announcements from NCERT and CBSE below. Important updates relating to your studies which will help you to keep yourself updated with latest happenings in school level education. Keep yourself updated with all latest news and also read articles from teachers which will help you to improve your studies, increase motivation level and promote faster learning

TV Channels for Students by CBSE

In enhancing the students studying part, the Government is planning to introduce one standard one channel plan. The lockdown in India has adversely collapsed all the operations including schools, colleges, and workplaces with unanticipated setbacks. On behalf of the...

CBSE Decision on Board Exam 2020

The Class 10 and 12 exams are cancelled, and results for both 10th and 12th would be declared by July 15 based on internal exams. CBSE Class 12 students would have the option to appear for the exams at a later date. CBSE has a scheme in which marks scored in past 3...

CBSE Boards Paper Checking to Start

As per the announcement recently released by the Ministry of Home Affairs, at least 3000 CBSE affiliated selected as evaluation centers for board exam answer sheets will be allowed to open for the limited purpose of evaluation purposes only. The answer sheets for Board...

Class 10 Datesheet announced

CBSE has announced the date sheet for the remaining class 10 Board Exams, see dates below

Procedure for correction in Name and Date of Birth

Procedure for correction in Name and Date of Birth in CBSE records Name Change: Applications regarding changes in name or surname of candidates will be considered provided the changes have been admitted by the Court of law and notified in the Government Gazette before...

Studies Today