ACCOUNTING FOR INCOMPLETE RECORDS Class XI Accountancy
ACCOUNTING FOR INCOMPLETE RECORDS
Incomplete accounting records are those records which are not complete as per the double entry principle of accounting.
- Reasons of incomplete records.
- Accountant ignores double entry principles.
- Destruction in books of accounts.
- Evasion of taxes.
- Limitations of incomplete records.
- Difficult to conduct audit.
- Difficult to check the internal system.
- Difficult to identify the fraud.
- Helps in ascertaining Trading and Profit & Loss Account.
- Helps in checking the arithmetical accuracy of accounts.
- Difference between Double entry system and Single entry system.
|Basis||Double entry system||Single entry system|
|Basis||It is based on principles||It is not based on principles.|
|Records both the aspects of a transaction.||Both the aspects of a transaction are not recorded.|
|Accounts maintained |
|All types of accounts- Real, Personal and Nominal accounts are maintained.||Usually cash and personal accounts are maintained.|
|Utility||Useful for all types of traders.||Useful for small traders only.|
|Financial Position||True and fair financial statement is ascertained.||Estimated financial statement is ascertained.|
- Difference between Statement of Affairs and Balance Sheet.
|Basis||Statement of Affairs||Balance Sheet|
|Basis||It is prepared on the basis of some ledger accounts and estimates.||It is prepared on the basis of some ledger accounts.|
|Omission of assets and liabilities |
|Omission of assets and liabilities cannot be easily ascertained.||Omission of assets and liabilities can be easily ascertained.|
|Financial Position |
|Shows only estimation of financial position.||Shows the true financial position.|
- Points to remember.
|1) If closing capital is less than opening capital, it denotes loss, in case of no drawings. |
2) Incomplete records are maintained by traders.
3) Credit purchases is the balancing figure of debtors account.
4) A statement of affairs is a document that is structured to provide an accurate accounting of the assets and liabilities of a debtor.