<\/span><\/h3>\nShort Questions for NCERT Accountancy Solutions Class 11 Chapter 11<\/strong><\/p>\n<\/span>1. State the meaning of incomplete records?<\/strong><\/span><\/h3>\nAccounting records prepared without following the double entry book keeping system strictly are called as incomplete records. In this type of recording mechanism some of the transactions are recorded either by making one entry or no entry. In this way it impacts assets, liabilities, revenue and expenses and hence are known as incomplete records<\/p>\n
<\/span>2. What are the possible reasons for keeping incomplete records?<\/strong><\/span><\/h3>\nIncomplete records are kept due to the following reasons:<\/p>\n
\n- Businesspersons lack a requisite accounting knowledge and are more inclined to follow this method.<\/li>\n
- Recording transactions using single entry system tends to be less time consuming and requires less maintenance<\/li>\n
- It is cost effective way of keeping records as it doesn\u2019t require a specialist<\/li>\n
- It gives the owner flexibility to record those transactions which are more important for business<\/li>\n<\/ul>\n
<\/span>3. Distinguish between statement of affairs and balance sheet.<\/strong><\/span><\/h3>\n\n
\n\n\n\u00a0<\/strong><\/td>\n<\/tr>\n\nBasis of Difference<\/strong><\/td>\nStatement of Affairs<\/strong><\/td>\nBalance Sheet<\/strong><\/td>\n<\/tr>\n\n| Meaning<\/td>\n | It is a statement that shows the assets, liabilities and capital of a business entity on basis of single entry system of bookkeeping<\/td>\n | It is a statement showing assets, liabilities and capital of a business entity prepared on the basis of double entry system of bookkeeping<\/td>\n<\/tr>\n | \n| Reliability<\/td>\n | As the data is based on estimates, it is not reliable.<\/td>\n | It is more reliable as it based on a tested method of data entry<\/td>\n<\/tr>\n | \n| Accounting Method<\/td>\n | Incomplete records forms the basis of its preparation<\/td>\n | Prepared from double entry book keeping<\/td>\n<\/tr>\n | \n| Accuracy<\/td>\n | Very Less<\/td>\n | Accurate to a large extent<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/span>4. What practical difficulties are encountered by a trader due to incompleteness of accounting records?<\/strong><\/span><\/h3>\nFollowing difficulties are faced by trader due to incompleteness of accounting records:<\/p>\n 1. It is not possible to determine accuracy of accounts and correctly prepare trial balance as the records are not as per the double entry system.<\/p>\n 2. It is difficult to make tax authorities believe, the reliability of the income that is computed.<\/p>\n 3. Determining and evaluating financial results of a business will not be possible<\/p>\n 4. True profit or loss cannot be determined as all transactions are not recorded.<\/p>\n 5. Profitability, liquidity and solvency of a business cannot be determined. Hence, investors will be doubtful about investment.<\/p>\n 6. Encourages fraud as there is no arithmetical accuracy in the records.<\/p>\n <\/span>Long Questions for NCERT Accountancy Solutions Class 11 Chapter 11<\/strong><\/span><\/h2>\n<\/span>1. What is meant by a \u2018statement of affairs\u2019? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?<\/strong><\/span><\/h3>\nIt is a statement that shows assets and liabilities, that is prepared at the beginning and end of one accounting period. Assets and liabilities are shown in two sides similar to a balance sheet. However, the basic difference between statement of affairs and balance sheet is that, the former is prepared from incomplete records while the latter is prepared from ledger entries.\u00a0Capital is said to be the difference between the totals of assets and liabilities.<\/p>\n Capital will be shown at the beginning and end of accounting period when a statement of affairs is prepared. Using this information, a statement of profit and loss is prepared to find out the profit or loss. Adjustments needs to be made for withdrawals by owner and for fresh capital introduced by owners during the period.<\/p>\n A business earns profit if the net results of calculation is positive and is said to make a loss if the results are negative. Thus, profit and loss of owners can be determined using this process.<\/p>\n <\/span>2. Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader\u2019? Do you agree? Explain.<\/strong><\/span><\/h3>\nIt is possible to prepare profit and loss account and balance sheet from incomplete book of accounts by a process known as conversion method. In this method, the incomplete records gets converted to double entry records. It is easy to convert some of the incomplete entries such as debtors, creditors, cash payments, cash sales and cash receipts as they are easily available. However, there will be some transactions for which details are not available. Still such details can be found using logic. Here are some transactions that are necessary for creating complete record.<\/p>\n 1. Opening capital<\/p>\n 2. Credit Purchases<\/p>\n 3. Credit sales<\/p>\n 4. Bills Payable accepted<\/p>\n 5. Opening Capital<\/p>\n 6. Payment to creditors<\/p>\n In some cases payment received from debtors and amount paid to creditors, for such cases it is essential to prepare debtor or creditor account to determine the values first. The final accounts can be prepared after these accounts are prepared.<\/p>\n <\/span>3. Explain how the following may be ascertained from incomplete records:<\/strong><\/span><\/h3>\n(a) Opening capital and closing capital<\/strong><\/p>\n(b) Credit sales and credit purchases<\/strong><\/p>\n(c) Payments to creditors and collection from debtors<\/strong><\/p>\n(d) Closing balance of cash.<\/strong><\/p>\n1. Opening capital and closing capital:<\/strong>\u00a0By preparing the opening statement of affairs at the start of the accounting period the opening capital value can be determined, while by preparing a closing statement of affairs, the value of closing capital can be determined.<\/p>\n\u00a0<\/strong><\/p>\n\n \n\n\n| Statement of Affairs as on\u2026.<\/strong>\n \u00a0<\/strong><\/p>\n<\/td>\n<\/tr>\n\nLiabilities<\/strong><\/td>\n| Amount<\/strong>\n \u20b9<\/strong><\/p>\n<\/td>\nAssets<\/strong><\/td>\n| Amount<\/strong>\n \u20b9<\/strong><\/p>\n<\/td>\n<\/tr>\n\n| Bills Payable<\/td>\n | \u2013<\/td>\n | Land and Building<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| Creditors<\/td>\n | \u2013<\/td>\n | Plant and Machinery<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| Outstanding expenses<\/td>\n | \u2013<\/td>\n | Furniture<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| Opening Capital (Balancing Figure)*<\/td>\n | \u2013<\/td>\n | Stock<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | Debtors<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | Bank\n Cash<\/p>\n<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | Prepaid Expenses<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | Opening Capital\u00a0(Balancing Figure)*<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n \u00a0<\/strong><\/p>\n* When total of liabilities are more than total of assets, capital is shown in assets side and represents debit balance.<\/p>\n When the total of assets\u2019 balance exceeds total of liabilities\u2019 balance, capital is shown in the liabilities side.<\/p>\n 2. Credit Sales and Credit Purchases:\u00a0<\/strong>Credit sales are found to be missing from incomplete records. For evaluating it, there is need of preparing total debtors account. The total sales return, if there is any, must be deducted from the total debtors account. The credit sales is given by the balancing figure.<\/p>\nSimilarly, to evaluate credit purchases, preparing total creditor account is necessary. Total purchase returns should be deducted from total creditors account. The balancing figure represents the credit purchase.<\/p>\n \n \n\n\nTotal Debtors Account<\/strong><\/td>\n<\/tr>\n\nDr.<\/strong><\/td>\n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | Cr.<\/strong><\/td>\n<\/tr>\n\nParticulars<\/strong><\/td>\nJ.F.<\/strong><\/td>\n| Amount<\/strong>\n \u20b9<\/strong><\/p>\n<\/td>\nParticulars<\/strong><\/td>\nJ.F.<\/strong><\/td>\n| Amount<\/strong>\n \u20b9<\/strong><\/p>\n<\/td>\n<\/tr>\n\n| Balance b\/d<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n | Cash (Cash Received)<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| Bills Receivable<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n | Bank (Cheque Received)<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| (Bill Dishonoured)<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | Discount Allowed<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| Bank (Cheque Dishonoured)<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n | Bad Debts<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| Credit Sales (Balancing Figure)<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n | Sales Returns<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | Bills Receivable\n (Bill Received)<\/p>\n<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | Balance c\/d<\/td>\n | \u00a0<\/td>\n | \u2013<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n | \n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/strong><\/p>\n\n \n\n\nTotal Creditors Account<\/strong><\/td>\n<\/tr>\n\nDr.<\/strong><\/td>\n| \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | \u00a0<\/td>\n | Cr.<\/strong><\/td>\n<\/tr>\n\nParticulars<\/strong><\/td>\n | | | | | | | | | | | | | | | | | | | | | | | | | |
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