Meaning of Incomplete Records:
Incomplete records refer to a condition wherein; an establishment is not practising double-entry bookkeeping. Instead, it is practising an unconventional accounting system, namely, a single-entry system, to sustain a decreased amount of data about its financial results.
Under a single-entry system, it is reasonable to keep a cash-basis income statement, although not a balance sheet. It is also feasible that the administrators of a firm, resolve to maintain a double-entry bookkeeping system, but the accounting records are incomplete.
Reasons for Incomplete Records:
- Fraudulent behaviour: Employees may voluntarily confuse or nevermore record some transactions, that they can flee with the company assets or record extreme degrees of profitability.
- Inadequate systems: There may be an incomplete system of methods and helping authorities in place that different business transactions are not recorded in the accounting system.
- Loss during the transition: A company may not sufficiently shield its old records when moving to a new accounting system, and loses a few or all the old records.
|Important Topics in Accountancy:|
Features of Incomplete Records:
The features of incomplete records are as under :
- It is an irregular process of recording transactions.
- Personal transactions of owners might be recorded in the cash book.
- To determine profit or loss or for taking any other data, certain figures can be obtained only from the original vouchers such as sales or purchase invoice, etc.. Therefore, dependency on original vouchers is necessary.
- Many companies maintain records according to their preference and requirements, and their accounts are not relative due to lack of consistency.
Limitations of Incomplete Records:
- Accurate evaluation and ascertainment of the financial outcome of business operations cannot be done.
- The owners encounter numerous challenges in registering an insurance claim in case of loss of inventory, either by fire or theft.
- It becomes hard to convince the income tax authorities about the reliability of the computed income.
|Single Entry System|
|Advantages of Single Entry System|
|Multiple Choice Questions|
|Q.1- Which of the following is an advantage of single entry system?|
|a. Flexible Method|
b. Simple method
c. Less expensive
d. All of the above
|Q.2- Single entry system is suitable only for _________entities.|
c. Both a and b
d. None of the above
|Q.3- In single entry system Financial position is ascertained by preparing _______________.|
|a. Profit and Loss Account|
b. Statements of the affairs
c. Balance Sheet
d. All of the above
|1-d, 2-a, 3-b|
The above mentioned is the concept, that is elucidated in detail about the ‘Accounts from Incomplete Records’ for the Class 11 Commerce students. To know more, stay tuned to CoolGyan’S.