NIOS Class 12 Accountancy Chapter 21 Accounts From Incomplete Records

NIOS Class 12 Accountancy Chapter 21 Accounts From Incomplete Records Solutions English Medium As Per New Syllabus. to each chapter is provided in the list so that you can easily browse throughout different chapters NIOS Class 12 Accountancy Chapter 21 Accounts From Incomplete Records Notes and select need one. NIOS Class 12 Accountancy Chapter 21 Accounts From Incomplete Records Question Answers Download PDF. NIOS Study Material of Class 12 Accountancy Paper Code: 320.

NIOS Class 12 Accountancy Chapter 21 Accounts From Incomplete Records

Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 12 Accountancy Solutions English Medium, NIOS Senior Secondary Course Accountancy Notes in English Medium for All Chapter, You can practice these here.

Accounts From Incomplete Records

Chapter: 21

Module – 3: Financial Statement

INTEXT QUESTIONS 21.1

I. Fill in the blanks with appropriate words :

(i) The assets and liabilities are put down by physical and _________.

Ans: Estimated.

(ii) Single Entry System is a very __________ method of recording business transactions.

Ans: Simple.

(iii) Single Entry System is ___________ expensive as compared to Double Entry System of book keeping.

Ans: Less.

II. State whether the following statements are true or false :

(i) A statement of Affairs prepared from incomplete records provides satisfactory information.

Ans: False.

(ii) Preparation of incomplete records is scientific system.

Ans: False.

(iii) Comparative study is difficult in Single Entry System.

Ans: True.

State whether the following are True or False :

(i) Capital = Total Assets + Liabilities.

Ans: False.

(ii) Total Assets = Capital + Liabilities.

Ans: True.

(iii) Profit = (Capital at the end + Drawing – Additional Capital Introduced – Capital at the beginning).

Ans: True.

INTEXT QUESTIONS 21.2

I. State Whether the following statements are true or false :

(i) Net Credit Sales = Total Sales + Cash Sales – Sales Return

Ans: False.

(ii) Net Sales = Cost of goods sold + Gross Profit.

Ans: True.

(iii) Net Purchases = Cost of goods sold + Closing stock – Opening stock.

Ans: False.

(iv) Gross Profit = Net ales – Cost of Goods Sold.

Ans: True.

TERMINAL EXERCISE

1. Define Single Entry System and explain its features.

Ans: Kohler defines Single Entry System as, “A system of book keeping in which as a rule only records of cash and of personal accounts are maintained, it is always incomplete double entry varying with the circumstances.”

Sometimes, the term Single Entry System is mistakenly understood that under this system only one aspect of a transaction is recorded in the books. This is not true.

The fact remains that under this system, while for certain transactions both the aspects are recorded, for others only one aspect is recorded and some transactions are even ignored.

The features of the Single Entry System are as follows:

(i) Suitability: This system is suitable for small businesses such as sole trader or partnership firm. Limited companies due to legal provisions, cannot maintain accounting books on Single Entry System.

(ii) Preparation of Cash Book: Generally, a Cash Book is prepared in this system in which business as well as private transactions are mixed up.

(iii) Preparation of Personal Accounts: Normally under this system, only personal accounts are prepared and real and nominal accounts are avoided.

(iv) No Uniformity: This system may differ from firm to firm, because same principles are not followed by all the enterprises.

(v) Requirement of Original Vouchers: Usually under this system, we have to depend on originally vouchers for collecting the necessary informations.

(vi) Preparation of Final Accounts: In the absence of all nominal and real accounts the final accounts cannot be prepared easily. It is possible after converting the available information into double entry system and missing amounts are determined then Trading & Profit & Loss A/c can be prepared. The amount of all assets and all liabilities can also be computed from incomplete records, but they are based on estimates. That is the reason that the statement of assets and liabilities prepared under this system at the end of an accounting period is called a Statement of Affairs instead of Balance Sheet.

2. List any three circumstances under which records may be rendered as incomplete.

Ans: Three circumstances under which records may be rendered incomplete:

(i) Cash transactions only are recorded: If only cash receipts and payments are recorded, leaving out credit transactions, the records will be incomplete.

(ii) Non-maintenance of separate accounts for incomes and expenses: When revenue incomes and expenditures are not recorded separately, it becomes difficult to ascertain surplus or deficit.

(iii) Omission of certain transactions: If some transactions like outstanding expenses, prepaid expenses, or accrued incomes are not recorded, the accounting records remain incomplete.

3. How is profit calculated under the Statement of Affairs Method?

Ans: Profit Calculation under the Statement of Affairs Method Profit is calculated by comparing the opening capital with the closing capital, after adjusting for drawings and additional capital introduced during the period.

Formula:

Profit (or Loss) = Closing Capital – Opening Capital + Drawings – Additional Capital Introduced.

Steps:

(i) Ascertain the opening capital from the opening Statement of Affairs.

(ii) Ascertain the closing capital from the closing Statement of Affairs.

(iii) Adjust for drawings made by the owner during the period.

(iv) Adjust for any additional capital introduced during the period.

(v) The resulting figure is the profit if positive, or loss if negative.

This method is used when complete books of accounts are not maintained.

4. What do you mean by Single Entry System?Also explain the uses of Single Entry System.

Ans: Single Entry System is an incomplete method of accounting in which only one aspect of each transaction is recorded, usually either cash or personal accounts. Unlike the double entry system, it does not record both debit and credit for every transaction, and hence it does not provide a complete picture of the financial position.

It is commonly used by small businesses or sole proprietors due to its simplicity, but it is prone to errors and cannot accurately determine profit or loss without additional methods like the Statement of Affairs.

Uses of Single Entry System are as follows:

(i) Simple Method: Single entry is a very simple method of recording business transactions.

(ii) Less Expensive: It is less expensive when it is compared to Double Entry System of book keeping.

(iii) Suitable for Small Concerns : It is mainly suited to small business concerns with limited number of transactions and very few assets and liabilities.

(iv) No Need of Knowledge of Principles of Book Keeping: Under Single Entry System, accounting records can be easily maintained as their maintenance does not require knowledge of the principles of book keeping.

(v) Easy to Ascertain Profit or Loss: Ascertainment of profit or loss in much easier. To ascertain profit or loss, the proprietor has to compare the financial position of business at the close of the accounting period with that at the beginning.

5. What steps are taken to convert a set of books not maintained under Double Entry System into the same?

Ans: Steps to Convert Single-Entry Books into Double-Entry System:

(i) Collect and Organize Records: Gather all cash books, receipts, payments, sales, purchases, bills, and vouchers Arrange them chronologically.

(ii) Ascertain Assets, Liabilities, and Capital: Prepare a balance sheet from existing records.List assets and liabilities.

Calculate capital as:

(iii) Classify Revenue and Expenses: Separate receipts and payments into revenue (income) and expenses.

(iv) Open Ledger Accounts: Create accounts for assets, liabilities, capital, revenue, and expenses.

(v) Make Opening Journal Entries: Record all assets, liabilities, and capital in journal form.

Example:

Cash A/C Dr

To Capital A/C

(vi) Post to Ledgers and Prepare Trial Balance: Post all journal entries to ledgers.

Prepare a trial balance to check that debits = credits.

(vii) Adjust for Omissions or Errors: Include outstanding items, prepaid expenses, and depreciation.

(viii) Continue Double-Entry Accounting: Record all future transactions in double-entry form. Prepare Trading, Profit & Loss, and Balance Sheet accounts as usual.

6. Arvind does not keep proper records of his business, he gives you the following information :