Accountancy · Class 11 Commerce

Ch 11Accounts from Incomplete Records — Class 11 Accountancy, concept-first.

So far we have studied the accounting records of firms that follow the double entry system of book-keeping, which can give the impression that every business keeps its books this way.

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Statement of Affairs

Start with something you already know. You keep a rough note of what you own and what you owe. Your phone is worth ₹40,000, your bike ₹80,000, you have ₹15,000 in the bank, but you owe a friend ₹25,000.

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Introduction

So far we have studied the accounting records of firms that follow the double entry system of book-keeping, which can give the impression that every business keeps its books this way.

11.1

Meaning of Incomplete Records

Accounting records that are not strictly kept according to the double entry system are known as incomplete records.

11.1.1

Features of Incomplete Records

Records may be incomplete because only some transactions are recorded — as with small shopkeepers such as grocers and vendors — or because a large organisation's records are damaged or lost due to a n…

11.2

Reasons of Incompleteness and Its Limitations

Many businessmen deliberately keep incomplete records for the following reasons:

11.3

Ascertainment of Profit or Loss

Every firm wishes to know the results of its operations, so as to judge its efficiency and its successes and failures. This creates the need to prepare financial statements that disclose:

11.3.1

Preparing Statement of Affairs

Under this method, a statement of assets and liabilities at the beginning and at the end of the accounting period is prepared to find the change in capital during the period.

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11.3.2

Difference between Statement of Affairs and Balance Sheet

Both a statement of affairs and a balance sheet show the assets and liabilities of a business on a particular date, but there are important differences between the two.

11.4

Preparing Trading and Profit and Loss Account and the Balance Sheet

To prepare a proper Trading and Profit and Loss Account and a Balance Sheet, one needs complete information about expenses, incomes, assets and liabilities.

11.4.1

Ascertaining Credit Purchases

The figure of credit purchases is usually not available from incomplete records, and some other information relating to creditors may also be missing.

11.4.2

Ascertainment of Credit Sales

The figure of credit sales is also usually not available from incomplete records, and some other information relating to debtors may be missing too.

11.4.3

Ascertainment of Bills Receivable and Bills Payable

Quite often all the details relating to bills receivable and bills payable are available, but the figures of the bills received and the bills accepted during the year are not given.

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