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. In

practice, however, many small enterprises — grocers, vendors, small traders and professionals —

do not maintain their records strictly as per the double entry system. They keep only partial

or incomplete records of their transactions. Yet they too must find out the profit or loss

earned during the year and the financial position of the firm at the year end.

This chapter of CBSE Class 11 Accountancy (NCERT) deals with exactly that situation: how to

ascertain the profit or loss and the financial position of a firm that has not maintained its

books under double entry, or whose records are otherwise incomplete. After studying it you should

be able to state the meaning and features of incomplete records, calculate profit or loss using

the statement of affairs method, distinguish between a balance sheet and a statement of

affairs, prepare a trading and profit and loss account and a balance sheet from incomplete

records, and detect missing figures by preparing the relevant accounts. These are the ideas that

recur across NCERT Accountancy questions and answers and in previous-year question papers on this

topic.