Incomplete Records Class 11 Notes Accountancy Chapter 10 - CBSE

Chapter : 10

What Are Incomplete Records ?

Incomplete Records

This chapter explores the concept of incomplete records, which refers to situations where businesses maintain limited or partial accounting records, making it difficult to determine accurate financial information.

Limitations Of Incomplete Records

  • As the accounts are incomplete in nature, there are strong chances of fraud.
  • Arithmetical accuracy of accounts under single entry system cannot be checked, as trial balance cannot be prepared.
  • Correct ascertainment and evaluation of financial results of business operations cannot be made.
  • Accounts of different organisations are not comparable due to lack of uniformity.

Ascertainment Of Profit/Loss

The chapter explains methods used to ascertain the profit or loss of a business based on incomplete records. The Statement of Affairs Method and the Single Entry System are introduced as approaches to determine the financial position of the business.

Statement Of Affairs

Students learn how to prepare a Statement of Affairs using the available information, such as opening capital, drawings, additional capital, assets, and liabilities. This statement helps determine the opening and closing capital of the business.

The format of Statement of Affairs is given below

Statement of Affairs

as at................

Liabilities Amount (₹) Assests Amount (₹)
Back Overdraft Cash in Hand
Bills Payable Cash in Bank
Sundry Creditors Bills Receivable
Outstanding Expenses Sundry Debtors
Incomes Received in Advance Stock
Capital (Balancing Figure) Prepaid Expense
Accrued Income
Plant and Machinery, etc.
........... ...........

Calculation of Profit or Loss by Statement of Affairs or Net Worth Method

For the calulation of profit or loss, given below steps should be followed:

  • Step 1: Firstly, prepare the statement of affairs at the beginning, of the year for calculation opening capital.
  • Step 2: Then, prepare the statement of affairs at the end, to calculate the closing capital.
  • Step 3: Prepare statement of profit or loss to find profit earned or loss incurred during the year.

The Format Of Statement Of Profit Or Loss Is Given Below

Statement Showing Profit or Loss

for the year ended........

Particulars Amount (₹)
Capital at the End of the Year (Computed from statement of affairs as at the end of year) ...........
(+) Drawings During the Year ...........
(-) Additional Capital Introduced During the Year (...........)
Adjusted Capital at the End of Year ...........
(-) Capital in the Beginning of Year (Computed from statement of affairs as at the beginning of year) (...........)
Profit or Loss Made During the Year ...........

The same computation can be done in the form of an equation as follows:

  • Formula: Profit or Loss = Capital at the end - Capital in the Beginning + Drawings During the Year - Capital Introduced During the Year

Single Entry System

The concept of the Single Entry System is introduced, which is used when double-entry book keeping is not followed. Students learn how to prepare a Statement of Affairs and Statement of Profit or Loss using the method.

The chapter on “Accounts from Incomplete Records” provides an understanding of how to handle accounting situations where complete records are not available. It introduces alternative methods to ascertain profit or loss and prepares students to analyse financial information effectively.