Class 11 Accountancy - Chapter Accounts from Incomplete Records NCERT Solutions | Distinguish between statement of affairs
Distinguish between statement of affairs and balance sheet.
| Basic of Difference | Balance Sheet | Statement of Affairs |
|---|---|---|
| 1. Double Entry | It is prepared with the list of ledger balances drawn from the books of accounts kept on the basis of double entry. | It is not prepared with the list of ledger balances but with such information as is available from the accounting records kept on the basis of single entry. |
| 2. Arithmetical Accuracy | The tallying of balance sheet proves arithmetical accuracy of accounting books because it is prepared on the basis of a trial balance. | A statement of Affairs does not prove the arithmetical accuracy of accounting books because it is not prepared on the basis of a trial balance. |
| 3. Value of Assets and Liabilities | The values of assets and liabilities shown in a Balance Sheet are the actual values based on ledger accounts. | The values of assets and liabilities shown in the statement of Affairs are merely the estimates based on physical inspection. |
| 4. Object | It is prepared for ascertaining the financial position of a business. | It is prepared for ascertaining the capital of a business. |
| 5. Omission of an Asset or a Liability | If an asset or liability is omitted while preparing a Balance Sheet, it will be easily detected because the Balance Sheet will not tally. | If an asset or liability is omitted while preparing a statement of affairs, it cannot be easily detected. |
| 6. Reliability | A Balance Sheet is treated as more reliable because it is based on double entry principles. | It is treated as less reliable because it is based on incomplete records and estimates. |
More Questions From Class 11 Accountancy - Chapter Accounts from Incomplete Records
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Credit purchase, during the year is ascertained by preparing :
(a) Total creditors account (b) Total debtors account
(c) Cash account (d) Opening statement of affairs - Q:-
What are the possible reasons for keeping incomplete records?
- Q:-
Explain how the following may be ascertained from incomplete records:
(a) Opening capital and closing capital
(b) Credit sales and credit purchases
(c) Payments to creditors and collection from debtors
(d) Closing balance of cash. - Q:-
State the meaning of incomplete records?
- Q:-
Tick the correct answer :
Incomplete record mechanism of book keeping is :
(a) Scientific (b) Unscientific
(c) Unsystematic (d) both (b) and (c) - Q:-
Opening capital is ascertained by preparing :
(a) Total debtors account (b) Total creditors account
(c) Cash account (d) Opening statement of affairs - Q:-
Write the correct word(s) :
1. Credit sales can be ascertained as the balancing figure in the .......... account.
2. Excess of .......... over ......... represents loss sustained during the period.
3. To ascertain the profit, closing capital is to be adjusted by deducting .......... and adding ..........
4. Incomplete records are generally used by .......... - Q:-
If opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs. 10,000, closing capital Rs. 90,000. The value of profit earned during the period will be :
(a) Rs. 20,000 (b) Rs. 25,000
(c) Rs. 30,000 (d) Rs. 40,000 - Q:-
What is meant by a ‘statement of affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?
- Q:-
‘Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader’? Do you agree? Explain.
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Indicate against each amount wheather it is a debit or a credit balance, and prepare a trial balance as at March 31, 2014 based on the following balances:
Accounts Title Amount ₹
Capital 1,00,000
Drawings 16,000
Machinery 20,000
Sales 2,00,000
Purchases 2,10,000
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Complete the following sentences with appropriate words:
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Furniture purchased from M/s Rao Furnishigs for 8,000 was entered into the purchases book.
This is the error of ........................................
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The rectification entry will be:
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State whether the following statements are true or false:
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- Depreciation is also charged on current assets.
- Depreciation is decline in the market value of tangible fixed assets.
- The main cause of depreciation is wear and tear caused by its usage.
- Depreciation must be charged so as to ascertain true profit or loss of the business.
- Depletion term is used in case of intangible assets.
- Depreciation provides fund for replacement.
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- Depreciation is charged to reduce the value of asset to its market value.
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Cash withdrawn by the Proprietor should be credited to:
(i) Drawings account
(ii) Capital account
(iii) Profit and loss account
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State the meaning of:
(a) Outstanding expenses
(b) Prepaid expenses
(c) Income received in advance
(d) Accrued income
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