Class 11 Accountancy - Chapter Accounts from Incomplete Records NCERT Solutions | ‘Is it possible to prepare the pro
‘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.
The profit and loss account and the balance sheet can be prepared from the incomplete book of accounts through Conversion method. According to this method, incomplete records are converted into double entry records. In case of incomplete records, details of some transactions are easily available like cash sales, cash purchases, creditors, debtors; however, there are a number of transactions, the details of which may not be available directly. Yet, these details can be found out indirectly or logically. Some of the important items that are vital for preparing balance sheet are given below,
a. Opening capital
b. Closing capital
c. Credit purchases
d. Cash purchases
e. Credit sales
f. Cash sales
g. Payment from debtors
h. Payment to creditors
i. Opening stock
j. Closing stock
Below are given are the steps included in the conversion method in a chronological order:
a. If opening capital is not given, then the first step is to prepare an opening statement of affairs that gives the opening capital.
b. The second step is to prepare a cash book that gives the opening or the closing cash and bank balancer.
c. The next step is to prepare a total debtors account. It is prepared in order to find one of the missing figures, such as credit sales, opening debtors, closing debtors and cash received from debtors.
d. The subsequent step is to prepare a total creditors account to ascertain one of the missing figures, such as credit sales, opening creditors, closing creditors and cash paid to the creditors.
e. The last step is to prepare final accounts. On the basis of the missing figures ascertained in each of the above steps, along with other mentioned information, Trading and profit and loss account and balance sheet can be prepared.
More Questions From Class 11 Accountancy - Chapter Accounts from Incomplete Records
- Q:-
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:-
Distinguish between statement of affairs and balance sheet.
- 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?
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Recently Viewed Questions of Class 11 Accountancy
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If the trial balance agrees, it implies that:
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As an accountant of a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pendrive for 3,500 was posted from the journal to the ledger with a 3,500 debit to Office Equipment and another 3,500 debit to creditors accounts. Answer each of the following questions and present the amount of any misstatement :
(a) Is the balance of the office equipment account overstated, understated, or correctly stated in the trial balance?
(b) Is the balance of the creditors account overstated, understated, or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated, or correclty stated?
(d) Is the credit column total of the trial balance overstated, understated, or correctly stated?
(e) If the debit column total of the trial balance is 2,40,000 before correcting the error, what is the total of credit column. - Q:-
Which is the last step of accounting as a process of information?
a. Recording of data in the books of accounts
b. Preparation of summaries in the form of financial statements
c. Communication of information
d. Analysis and interpretation of information - Q:-
Trial balance is:
(a) An account.
(b) A statement.
(c) A subsidiary book.
(d) A principal book.
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