ACCOUNTING FOR INCOMPLETE RECORDS Class XI Accountancy
ACCOUNTING FOR INCOMPLETE RECORDS
- Incomplete Accounting 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.|
|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.|
|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.