Accountancy [Class 11 Semester II] Chapter 9: Accounts from Incomplete Records
Q. 1. What is accounting from incomplete records called?
Answer: Accounting from incomplete records is called the single entry system.
Q. 2. What is the Single Entry System?
Or, what is the one-sided entry system?
Answer: The accounting method in which only the cash account and personal accounts of the two parties to a transaction are recorded, and which does not fully follow the double-entry system, is called the single entry system.
Q. 3. Write the characteristics of the Single Entry System.
Answer: The characteristics of the single entry system are:
a) In this system only cash accounts and personal accounts are recorded; real (asset) accounts and nominal accounts are ignored. Therefore this system is called incomplete, fragmentary, and unscientific.
b) The single entry system is a mixture of single-entry, double-entry and non-entry methods.
c) Generally this system is suitable for small and medium-sized proprietorships, partnership firms, or joint family businesses.
Q. 4. What kinds of accounts are kept under the Single Entry System?
Answer: In this system only cash accounts and personal accounts are recorded; real (asset) accounts and nominal accounts are ignored. Therefore this system is called incomplete, fragmentary, and unscientific.
Q. 5. What types of entries does the Single Entry System include?
Answer: It is a mixture of single-entry, double-entry and non-entry.
Q. 6. In what types of establishments is the Single Entry System generally followed?
Answer: Generally this system is suitable for small and medium-sized proprietorships, partnership firms, or joint family businesses.
Q. 7. Write the advantages of the Single Entry System.
Answer: The advantages of the single entry system are:
a) It is a very simple method of bookkeeping.
b) A skilled accountant is not required for bookkeeping under this system.
c) This method takes less time for bookkeeping.
d) At the end of the accounting period, the firm’s profit or loss can be determined quite easily.
Q. 8. Write the disadvantages of the Single Entry System.
Answer: The disadvantages of the single entry system are:
a) There is no scope to verify the arithmetical accuracy of the accounts.
b) It is difficult to determine the true value of the business.
c) There is a high possibility of various kinds of errors and fraud.
d) If accounts are kept under this system, government authorities, income tax authorities, sales tax authorities, banks, etc., do not accept it.
Q. 9. Classify the Single Entry System.
Answer: The single entry system can be classified into three types:
1. Pure Single Entry System
2. Simple Single Entry System
3. Quasi Single Entry System
Q. 10. What is the Double Entry System?
Or, what is the reciprocal entry system?
Answer: The system in which each transaction is analyzed with regard to its two aspects — one aspect is debited to one or more accounts and the other aspect is credited to one or more accounts for an equal amount — is called the double entry system.
Q. 11. Write the differences between the Single Entry System and the Double Entry System.
Answer: The differences between the single entry system and the double entry system are:
a) In the single entry system only cash accounts and personal accounts are recorded; real (asset) accounts and nominal accounts are ignored.
In the double entry system personal accounts, real (asset) accounts and nominal accounts — in other words, all accounts — are maintained.
b) The single entry system is incomplete, fragmentary and unscientific.
The double entry system is a complete and scientific method of bookkeeping.
c) In the single entry system there is no scope to verify the arithmetical accuracy of the accounts.
In the double entry system it is possible to verify the arithmetical accuracy of the accounts.
d) If accounts are kept under the single entry system they are not accepted by income tax authorities, banks, or the government.
If accounts are kept under the double entry system they are accepted by income tax authorities, banks and the government.
Q. 12. What is meant by the Statement of Affairs?
Answer: A Statement of Affairs is a statement prepared on a specific date of a business organization in which all assets and liabilities with their monetary values or amounts are systematically arranged to determine the amount of capital by finding the difference between the two sides.
Q. 13. What is meant by the Opening Statement of Affairs?
Answer: The Opening Statement of Affairs is the statement prepared at the beginning of an accounting year to determine the total amount of capital of the business at the start of that year.
Q. 14. What is meant by the Closing Statement of Affairs?
Answer: The Closing Statement of Affairs is the statement prepared at the end of an accounting year to determine the total amount of capital of the business at the close of that year.
Q. 15. What is meant by the Final Statement of Affairs?
Answer: After determining profit or loss from the Statement of Profit or Loss, the Final Statement of Affairs is the statement prepared at the end of the year to ascertain the final financial position of the enterprise, similar to a Balance Sheet under the double-entry system.
Q. 16. Write the differences between a Balance Sheet and a Statement of Affairs.
Answer: The differences between a Balance Sheet and a Statement of Affairs are as follows:
a)
A Balance Sheet is regarded as a legally recognized and reliable document.
A Statement of Affairs is not regarded as a legally recognized and reliable document.
b)
With the help of a Balance Sheet, the arithmetical accuracy of accounts can be verified.
With the help of a Statement of Affairs, the arithmetical accuracy of accounts cannot be verified.
c)
Both sides of a Balance Sheet always agree; otherwise, it indicates some error in the accounts.
Both sides of a Statement of Affairs never agree. The excess of assets over liabilities is treated as capital in it.
d)
It is prepared in the double-entry system of accounting.
It is prepared in the pure single-entry system of accounting.
Q. 17. How is Opening Capital calculated?
Answer: The formula for determining the opening capital is:
Opening Capital = Total Opening Assets – Total Opening Liabilities
Q. 18. What is meant by the Capital Comparison Method?
Answer: The Capital Comparison Method is the method in which, after determining profit or loss from the Profit and Loss Statement, both Opening and Closing Statements of Affairs are prepared to determine the respective Opening and Closing Capitals, and adjustments are made for any additional capital introduced and drawings during the accounting period.
Q. 19. What is meant by the Conversion Method?
Answer: The method by which final accounts are prepared in the double-entry system from the necessary information extracted from incomplete data maintained under the single-entry system is called the Conversion Method.
Q. 20. How can credit sales be determined from incomplete information?
Answer: The formula to determine credit sales from incomplete information is:
Credit Sales = (Closing Debtors + Cash received from Debtors) – Opening Debtors
Q. 21. Fill in the blanks:
a) When the closing capital is less than the opening capital, it indicates _____________.
b) If the closing capital is more than the opening capital, it indicates _____________.
c) The amount of credit purchases is determined from the _____________ account.
d) The amount of credit sales is determined from the _____________ account.
Answers:
a) Loss
b) Profit
c) Creditors’
d) Debtors’
Q. 22. Closing Capital = ₹72,000, Additional Capital Introduced = ₹18,000, Drawings = ₹24,000, Opening Capital = ₹53,000.
Find the amount of profit.
Answer:
We know,
Profit = (Closing Capital + Drawings) – (Additional Capital + Opening Capital)
= (₹72,000 + ₹24,000) – (₹18,000 + ₹53,000)
= ₹25,000
Q. 23. Opening Capital = ₹1,50,000, Closing Capital = ₹2,75,000, Drawings = ₹25,000, Additional Capital = ₹45,000. Find total profit.
Answer:
Profit = (Closing Capital + Drawings) – (Additional Capital + Opening Capital)
= (₹2,75,000 + ₹25,000) – (₹45,000 + ₹1,50,000)
= ₹95,000
Q. 24. Closing Capital = ₹2,23,000, Drawings = ₹12,000, Opening Capital = ₹1,40,000, Profit = ₹35,000. Find Additional Capital.
Answer:
Profit = (Closing Capital + Drawings) – (Additional Capital + Opening Capital)
⇒ Additional Capital = (Closing Capital + Drawings) – (Profit + Opening Capital)
= (₹2,23,000 + ₹12,000) – (₹35,000 + ₹1,40,000)
= ₹60,000
Q. 25. Opening Capital = ₹6,000, Closing Capital = ₹4,000, Profit = ₹3,000. Find the amount of Drawings.
Answer:
Profit = (Closing Capital + Drawings) – (Additional Capital + Opening Capital)
⇒ Drawings = (Opening Capital + Additional Capital + Profit) – Closing Capital
= (₹6,000 + NIL + ₹3,000) – ₹4,000
= ₹5,000
Q. 26. Opening Capital = ₹22,000, Profit = ₹12,000, Drawings = ₹14,000, Additional Capital = ₹16,000. Find Closing Capital.
Answer:
Profit = (Closing Capital + Drawings) – (Additional Capital + Opening Capital)
⇒ Closing Capital = (Opening Capital + Additional Capital + Profit) – Drawings
= (₹22,000 + ₹16,000 + ₹12,000) – ₹14,000
= ₹36,000*l
Q. 27. If the Opening Capital is ₹20,000 more than the Closing Capital and Drawings = ₹50,000, find the amount of Profit.
Answer:
Profit = (Closing Capital + Drawings) – (Additional Capital + Opening Capital)
⇒ Profit = (Drawings – Additional Capital) – (Opening Capital – Closing Capital)
= (₹50,000 + NIL) – ₹20,000
= ₹30,000
Q. 28. From the following information, find the Closing Capital:
Opening Capital = ₹12,500, Drawings = ₹5,000, Loss = ₹2,500.
Answer:
Loss = (Opening Capital + Additional Capital) – (Drawings + Closing Capital)
⇒ Closing Capital = (Opening Capital + Additional Capital) – (Drawings + Loss)
= (₹12,500 + NIL) – (₹5,000 + ₹2,500)
= ₹5,000
Q. 29. From the following information, find the Closing Capital of Paul & Co.:
Opening Capital = ₹25,000, Drawings = ₹10,000, Loss = ₹5,000.
Answer:
Loss = (Opening Capital + Additional Capital) – (Drawings + Closing Capital)
⇒ Closing Capital = (Opening Capital + Additional Capital) – (Drawings + Loss)
= (₹25,000 + NIL) – (₹10,000 + ₹5,000)
= ₹10,000
Q. 30. From the following information, determine the total sales:
Credit Sales = 75% of Total Sales.
Credit Sales = ₹8,00,000.
Answer:
Total Sales = Credit Sales × 100 / 75
= ₹8,00,000 × 100 / 75
= ₹10,66,667 (approx.)
Q. 31. From the following information, determine the total sales:
Credit Sales = 75% of Cash Sales.
Credit Sales = ₹7,50,000.
Answer:
Cash Sales = Credit Sales × 100 / 75
= ₹7,50,000 × 100 / 75
= ₹10,00,000
Total Sales = Cash Sales + Credit Sales
= ₹10,00,000 + ₹7,50,000
= ₹17,50,000
Q. 32. From the following data, find the total purchases:
Cash Purchases = ₹2,50,000, Credit Purchases = 80% of Total Purchases.
Answer:
Credit Purchases = 80% of Total Purchases
⇒ Cash Purchases = 20% of Total Purchases
Total Purchases = Cash Purchases × 100 / 20
= ₹2,50,000 × 100 / 20
= ₹12,50,000
Q. 33. In a certain year, Opening Creditors = ₹1,50,000, Closing Creditors = ₹2,70,000, and ₹1,30,000 has been paid to creditors during the year. Find the amount of Credit Purchases.
Answer:
Credit Purchases = (Closing Creditors + Cash Paid to Creditors) – Opening Creditors
= (₹2,70,000 + ₹1,30,000) – ₹1,50,000
= ₹2,50,000
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