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Accounts from Incomplete Records Class 11 Notes CBSE Accountancy Chapter 11 (Free PDF Download)

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Revision Notes for CBSE Class 11 Accountancy Chapter-11 - Free PDF Download

The young minds always want to learn and achieve something. For those students, the CBSE notes on our official website of Vedantu will become an add on. It has a detailed explanation of each concept in multiple scenarios. Chapter 11 Accounts Class 11 Notes by Vedantu beneficial in clarifying doubts and provides good command on the subject. The website also provides a download option for the students to get physical copies. Students can utilize CBSE Class 11 Accountancy Notes Chapter 11 PDFs and download them for free to study during the exam period. 

Students can clarify their doubts while going through the important points in this PDF, which helps in scoring better percentages than before. It is also appreciable to take a hard copy and store it for future use. It avoids unnecessary disturbances like electrical fluctuations and internet disconnections.

Download CBSE Class 11 Accountancy Revision Notes 2023-24 PDF

Also, check CBSE Class 11 Accountancy revision notes for All chapters:


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Access CBSE Class 11 Accountancy Chapter-11 Accounts From Incomplete Records Notes

Meaning of Incomplete Records 

Incomplete records are the accounting records that do not strictly follow the double entry system of accounting. For example: If one sided entry, or no entry for a transaction is recorded, it is classified as an incomplete record.

Features of Incomplete Records

Many times, small shopkeepers maintain incomplete records due to partial recording of transactions. In case of large organisations, the records may become incomplete due to loss by theft or fire, or due to natural calamities.
The features of incomplete records are as follows:

1) Incomplete records system is not a systematic method of recording transactions due to the partial recording of transactions. 

2) In this system, the records for cash transactions and personal accounts are maintained properly, whereas no information is recorded regarding revenue/gains, expenses/losses, or assets and liabilities. 

3) Cash books often contain records for the personal transactions of owners. 

4) Comparability of accounts is not possible because there is no uniformity among the accounts of different organisations. This is because each organisation maintains records as convenient to them.

5) This system results in increased dependence on original vouchers because figures necessary to ascertain profit/loss or other information can be collected only from the original vouchers such as sales invoice or purchase invoice, etc.

6) The profit/loss for the year ascertained using this system is not highly reliable and accurate because it only provides an estimated profit/loss for the year.

7) The balance sheet at the end of the year does not reflect a true and complete picture of the assets and liabilities in the business because of partial recording of assets and liabilities.

Reasons of Incompleteness and Its Limitations 

Many businessmen prefer to keep incomplete records because: 

1) Maintaining incomplete records is easier for the people who lack proper knowledge of accounting principles.

2) It is an inexpensive mode of maintaining records because maintaining incomplete records is easier, and specialised accountants charging high costs are not required. 

3) It saves time because only a few books need to be maintained.

4) The owners can record only the important transactions and not record the less important transactions as per their needs, making this mode a convenient mode of maintaining records. 

Some of the limitations of maintaining incomplete records are: 

1) Accuracy of accounts cannot be ensured. This is because the lack of a double-entry system means that a trial balance cannot be prepared to ascertain the accuracy of accounts.

2) The financial results of the business operations cannot be correctly ascertained and evaluated because reliable financial statements cannot be prepared. 

3) Due to lack of reliable financial statements,important analysis such as analysis of profitability, liquidity, and solvency of the business cannot be made. 

4) Lack of financial reliable statements and proper analysis makes it difficult to raise funds from external sources. This causes issues in planning future business activities. 

5) It is difficult for the owners to claim insurance in case of loss of inventory by theft or due to fire. 

6) The tax authorities cannot be convinced easily about the reliability of the computed income. 

Statement of Affairs 

If incomplete records are maintained, then the amount of change in the capital during the period is ascertained by preparing theStatement of asset and liabilities as at the beginning and at the end of the relevant accounting period. This statement is called theStatement of Affairs, which shows the assets and liabilities, just like a balance sheet.

The basic format of a Statement of Affairs is shown as follows:

Statement of Affairs as at _____

Liabilities

Amount (Rs.)

Assets

Amount (Rs.)

Bills Payable

Creditors

Outstanding Expenses

Capital (balancing figure)






Land and Building

Machinery

Furniture

Stock

Debtors

Cash and Bank

Prepaid Expenses

Capital (balancing figure)



xxxx


xxxx

Difference between Statement of Affairs and Balance Sheet 

The following table shows the fundamental differences between a Statement of Affairs and a Balance Sheet.

Basis of difference

Statement of Affairs

Balance Sheet



Reliability

The Statement of Affairs is less reliable because it is constructed using incomplete records that do not follow the Double-Entry system of bookkeeping.

The Balance Sheet is more reliable because it is constructed using records that follow the Double-Entry system of bookkeeping.



Objective


The Statement of Affairs is prepared to ascertain the amount of capital at the beginning of the year, or on a particular date.

The Balance Sheet is prepared to show the true and complete financial position of a business entity on a particular date.



Omission

If some assets or liabilities are omitted from the records, it is not easy to discover the ones that are not recorded.

If some assets or liabilities are omitted from the records, it is easy to discover them from the accounting records in the books.

Statement of Profit and Loss 

The difference between the opening and closing capital, as ascertained using the Statement of Affairs,represents the increase or decrease in capital. This increase or decrease is to be adjusted for any additional capital brought in, or any drawings taken out by the owners, to ascertain the profit/loss made during the period.

The Statement of Profit or Loss is prepared to make the necessary adjustments and thus, determine the exact amount of profit or loss made during the year.

The basic format of a Statement of Profit or Loss is shown as follows:

Statement of Profit or Loss for the year ended _____

Particulars

Amount (Rs.)

Capital as at the end of the year (computed from statement of affairs as at the end of the year)

Add: Drawings during the year

Less: Additional capital introduced during the year

xxxx

xxxx
(xxxx)

Adjusted capital at the end of the year

xxxx

Less: Capital as at the beginning of the year (computed from statement of affairs as at the beginning of the year)

(xxxx)

Profit or Loss made during the year

xxxx

The following equation shows the same computation as performed in the Statement of Profit or Loss.

\[Profit/Loss = Capital\:at\:End\:-\:Capital\:at\:Beginning\:+\:Drawing\:During\:the\:Year\:\]

\[-\:Additional\:Capital\:Introduced\:During\:the\:Year\]

Preparing Trading and Profit and Loss Account and the Balance Sheet 

To prepare the proper and complete financial statements, complete information regarding details of various items is required. However, when incomplete records are maintained, the details of some items need to be ascertained using the logic of the double entry system of bookkeeping. This involves preparing a summary of cash, ledger accounts, etc. to find the balancing figures and use these details to prepare the financial statements.

The most common items missing from the records that need to be ascertained indirectly are: 

  • Opening capital

  • Credit purchases

  • Credit sales 

  • Bills payable accepted 

  • Bills receivable received 

  • Payments to creditors 

  • Payments to debtors 

  • Any other cash/bank related items

Ascertaining Credit Purchases 

When incomplete records are maintained, some information related to the creditors might be missing. The missing information may be either credit purchases, payment made to creditors, or any other figure. 

The missing figure can be ascertained by preparing the total creditors account, entering the given information related to the creditors in the account, and determining the balancing figure. The balancing figure provides the required missing information related to the creditors.

Ascertainment of Credit Sales 

Similar to ascertainment of credit purchases, some information related to the debtors might be missing. The missing information may be either credit sales, payment received from debtors, or any other figure. 

The missing figure can be ascertained by preparing the total debtors account, entering the given information related to the debtors in the account, and determining the balancing figure. The balancing figure provides the required missing information related to the debtors. Any bill or cheque dishonoured is debited to the total debtors account.

Ascertainment of Bills Receivable and Bills Payable 

In many cases, some information related to bills receivable or bills payable is missing. Even if all details related to the bills are available, it may happen that the figures of bills received and bills accepted during the accounting period are not given. To ascertain such figures, the total bills receivable account, or the total bills payable account is prepared, depending upon what figure is to be ascertained. 

Ascertainment of Missing Information through Summary of Cash 

A summary of the Cash Book is prepared to ascertain any missing figure related to cash transactions. It can be used to ascertain the missing amount paid to creditors, the missing amount received from debtors, the missing receipts or payments, or even missing opening and closing balances of the cash or bank.

Sometimes, two figures related to cash might be missing, which cannot be ascertained by just the summary of the cash book. For example, the amount received from debtors and the amount paid to creditors are both missing. In such a case, the total creditors account can be prepared to determine the amount paid to creditors. Then, the balancing figure of the summary of the cash book will represent the amount received from debtors. 

It is also possible to prepare the total debtors account first, and then prepare the cash book to ascertain the amount paid to creditors.

Illustration: Mrs. Surbhi started a business on April 01, 2016 with cash Rs. 50,000, furniture worth Rs. 10,000, goods worthRs. 2,000, and machinery worthRs. 20,000. During the year, she further introduced Rs. 20,000 in her business by opening a bank account. From the following information extracted from her books, you are required to prepare final accounts for the ended March 31, 2017. 

Particulars

Amount (Rs.)

Receipts from debtors

Cash sales

Cash purchases

Wages paid

Salaries to staff

Trade expenses

Electricity bill of factory

Drawings of Surbhi

Cash paid to creditors

Discount allowed

Discount received

Bad debts written-off

Cash balance at the end of year

57,500

45,000

25,000

5,000

17,500

6,500

7,500

3,000

42,000

1,200

3,000

1,300

20,000

Mrs. Surbhi used goods worth Rs. 2,500 for private purposes, which is not recorded in the books. Depreciation is to be charged on furniture at 10% p.a. and machinery at 20% p.a. The debtors on March 31, 2017 were worth Rs. 70,000, and the creditors Rs 35,000. On the same date, the stock was valued at Rs. 25,000.

Ans: Books of Mrs. Surbhi

Trading and Profit and Loss Account for the year ended march 31, 2017

Expenses/Losses

Amount (Rs.)

Revenues/Gains

Amount (Rs.)

To Opening stock

To Purchases:

To Cash                      25,000

To Credit                    80,000

                                 1,05,000

Less: Goods used

for private use      (2,500)

To Wages

To Electricity bill of factory

To Gross profit c/d

20,000






1,02,500

5,000

7,500

65,000

By Sales                  45,000

By Credit             1,30,000

By Closing stock


1,75,000

25,000


2,00,000


2,00,000

To Salaries

To Trade expenses

To Discount allowed

To Bad debts

To Depreciation:

Furniture                 1,000

    Land and Building  4,000

To Net profit (transferred to capital account)

17,500

6,500

1,200

1,300



5,000

36,500

By Gross profit b/d

By Discount received

65,000

3,000


68,000


68,000

Balance Sheet of Mrs. Surbhi as at March 31, 2017

Liabilities

Amount (Rs.)

Assets

Amount (Rs.)

Creditors

Capital                        1,00,000

Add: Net profit             36,500

                                     1,36,500

Add: Additional

Capital                   20,000

                                     1,56,500

Less: Drawings

Cash          36,000

Goods         2,500        (38,500)

35,000









1,18,000

Cash

Bank

Stock

Debtors

Furniture                    10,000

Less: Depreciation    (1,000)

Machinery                  20,000

Less: Depreciation    (4,000)

20,000

13,000

25,000

70,000


9,000


16,000


1,53,000


1,53,000

Working Notes: Total Creditors Account

Dr.


Cr.

Date

Particulars

JF

Amount (Rs.)

Date

Particulars

JF

Amount (Rs.)


To Cash

To Discount received

To Balance c/d


42,000

3,000

35,000


By Balance b/d

By Purchase credit (balancing figure)


NIL

80,000




80,000




80,000

      Total Debtors Account

Dr.


Cr.

Date

Particulars

JF

Amount (Rs.)

Date

Particulars

JF

Amount (Rs.)


To Balance b/d

To Sales (credit) (balancing figure)


NIL

1,30,000


By Cash

By Discount allowed

By Bad debts

By Balance c/d


57,500

1,200


1,300

70,000




1,30,000




1,30,000

Statement of Affairs as on March 31, 2016

Liabilities

Amount (Rs.)

Assets

Amount (Rs.)

Capital (balancing figure)

1,00,000




Cash

Stock

Furniture

Machinery

50,000

20,000

10,000

20,000


1,00,000


1,00,000

Summary of Cash

Dr.


Cr.

Receipts

Amount (Rs.)

Payments

Amount (Rs.)

To Balance b/d

To Capital (Bank)

To Debtors

To Sales

50,000

20,000

57,500

45,000


By Purchases

By Wages

By Salaries

By Trade expenses

By Electric bill

By Drawings

By Creditors

By Balance c/d – cash

By Closing bank 

(balancing figure)

25,000

5,000

17,500

6,500

7,500

36,000

42,000

20,000

13,000


1,72,500


1,72,500

Class 11 Accountancy Chapter 11 Accounts From Incomplete Records Notes

Accounts From Incomplete Records Notes Class 11 

It is well known that regular accounts can be made using a double-entry method: one side is filled with all debit transactions, and the other side is filled with all credit transactions. Ch 11 Accounts Class 11 has explained another specification while preparing a balance sheet. The records which are not mentioned in the double-entry system that has incomplete records. The entering of these records is nothing but a single entry system. Usually, cash records, information about assets and liabilities, and few expenses are included in these incomplete records.

Features of Incomplete Records 

To explain more about these incomplete records, Chapter 11 Accounts Class 11 Solutions Notes describes a few characteristics of such records. These include:

  • It is not a systematic approach to recording transactions.

  • All the transactions and information of owners were also recorded.

  • Different organizations maintain these records due to a lack of uniformity in the double-entry system.

  • Few transactions related to expenses, losses or gains, etc. were also recorded at times.

  • The accuracy of profit or loss cannot be assured with this system. It helps to estimate the approximate values of both laws and profit.

Reasons for Incompleteness and its Limitations

The next section is about the importance of incomplete records and the failures of maintaining these records. Class 11 Accounts from Incomplete Records Notes mentions various reasons such as expense, convenience, and techniques adopted by the persons who don't have proper knowledge on accounts. With regards to the drawbacks of the incomplete records, a few of them include lack of accuracy, the requirement of more financial resources, the difficulty faced by owners, etc.

Ascertainment of Profit or Loss

The notes of Accountancy Class 11 Chapter 11 have facilitated that every business organization wants to get certainty of both profit and loss faced in a particular Financial Year. This can be done through two methods or ways. These are also explained in the PDF with detailed examples. They are -

  • Preparing a statement of affairs. The difference between the statement and the balance sheet is also discussed in the PDF.

Capital = Total Assets - Total liabilities

  • Preparing trading and profit and loss accounts.

Preparing Trading and Profit and Loss Account 

Chapter 11 Accounts From Incomplete Records Class 11 has given clear information about the statement. It involves various transactions like- creditors, debtors, cash purchases, cash sales, etc. Few transactions are also missed which are not to be considered mandatory in the incomplete records. They are - opening balance, credit purchases, credit sales, bills receivable, bills payable, payments to creditors, payments to debtors.

Ascertainment of Credit Purchases

After understanding the statement of affairs and trading and profit loss account, each transaction mentioned in the profit and loss account should be understood clearly. So the PDF available on our official website of Vedantu has specified these topics individually. 

Accounts From Incomplete Records Class 11 Notes explain that the exact figure of credit purchases may not be available, and the information related to creditors might be missing several times. So the single entry system provides an ascertain value of credit purchases to maintain the balance sheet.

Ascertainment of Credit Sales 

Notes of Accounts From Incomplete Records Class 11 has given that the same rule is applicable for the debtors. That's the reason these incomplete records maintain and a certain value for credit sales also.

Ascertainment of Bills Receivables and the Bills Payables 

Here, the complete information regarding the bills receivables and payables were available, but the accurate figures are missing. So to balance these figures, it helps to provide ascertain values.

Ascertainment of Missing Information through a Summary of Cash

Ch 11 Accounts Class 11 explained that a human brain could not remember every single transaction. We use it to mention a summary of cash, including all receipts and bills, to balance the figures in the balance sheet for all the missing information.

FAQs on Accounts from Incomplete Records Class 11 Notes CBSE Accountancy Chapter 11 (Free PDF Download)

1. How can the profit or loss of a trader be ascertained with the help of a statement of affairs?

A statement that shows assets and liabilities, that are prepared at the beginning and end of one accounting period is known as a statement of affairs. Assets and liabilities are shown on two sides similar to a balance sheet. The former is prepared from incomplete records while the latter is prepared from ledger entries.


Capital = Total Assets - Total liabilities


Capital will be shown at the beginning and end of the accounting period. Using this information, a statement of profit and loss is prepared to find out the profit or loss. As the accurate information and figures were not available, few adjustments need to be made for withdrawals by the owner and for fresh capital introduced by owners during the financial year while preparing the statement of affairs.

2. Explain the differences between the statement of affairs and the balance sheet.

Both of the statements show several differences. The major differences are as follows- 

  • The level of accuracy is significantly less in the statement of affairs. In comparison, it is high in the balance sheet.

  • As all the information and figures were estimated in the statement of ethics, the reliability is comparatively less than that of the balance sheet.

  • The usage of accounting methodology may vary in the statement of affairs. On the other hand, the balance sheet always uses the double-entry method.

3. What do you mean by incomplete records?

When an organization does not use double-entry accounting, it is said to have incomplete records. Instead, it keeps a smaller quantity of information on its financial performance using a more informal accounting system, such as a single-entry system. Personal and monetary accounts are managed by a single entry system. The double Entry System is used to keep track of personal, real and nominal accounts. Incomplete records might pose major challenges in the long run.

4. What are the causes of incomplete records in Chapter 11 Class 11?

According to  Class 11, Chapter 11, a fire, a natural disaster or a burglary may have destroyed the documents. Other causes can be an extremely haphazard way of keeping track of financial transactions. Using this technique, only the cash accounts and the personal accounts of debtors and creditors are correctly kept. Neither the real nor the nominal accounts are kept up to date. A number of transactions have been removed entirely. A lack of standardization exists in the way transactions are recorded across various organizations.

5. What do you mean by a Statement of Affairs?

According to Vedantu’s notes as per the NCERT Solutions for Class 11, Chapter 11, the company's assets and liabilities are summarized in the Statement of Affair. It shows the net book value and the amount estimated to be recovered at the time of the business's insolvency. A list of creditors and stockholders is included with the balance sheet. A statement of affairs is basically an asset and liability statement in which the amount of capital is calculated by subtracting the total assets from the total liabilities. The notes or any study material provided by Vedantu are absolutely free of cost and are available at Vedantu.

6. What is a balance sheet and give its functions?

In a balance sheet, you'll find a list of all of your company's assets and liabilities. It tells you how much money you'd have if you liquidated all your assets and paid off all your obligations at any given time. Accountants use balance sheets to summarize a company's finances for a certain time period. In addition to being called a statement of financial status, the summary summarizes a company's financial assets, liabilities, and equity on a single page.

7. What are credit sales?

Credit sales refers to sales where the consumer agrees to pay at a later time. Advance Payment Sales are the sales in which the customer must pay before the deal can be completed. Payments for credit sales are paid several days or weeks after a product has been delivered. Short-term credit arrangements are recorded as accounts receivable on a company's balance sheet, as opposed to payments received in cash right away. Credit card payments can be used as an example to better understand the definition.