1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

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Karnataka 1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

1st PUC Accountancy Accounts from Incomplete Records Text Book Questions and Answers

Short Questions and Answers

Question 1.
State the meaning of incomplete records?
Answer:
Accounts that are not recorded as per the double entry system are known as incomplete records. According to Kohler (Dictionary for Accountants), single entry system is defined 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 circumstances. ”Many small-sized business firms maintain incomplete records of their business transactions.

They do not maintain proper books of accounts and mainly prepare books like, Cash Book, personal accounts (of debtors and creditors) and Balance Sheet at the end of the year. They maintain books as per their needs. This system is also known as defective double entry system.

The preparation of financial statements is neither as easier nor as effective, as it is under double entry system. Consequently, accurate profit of loss is not possible to ascertain.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 2.
What are the possible reasons for keeping incomplete records?
Answer:
The possible reasons for keeping incomplete records are:
Simple method: Proprietors, who do not have the proper knowledge of accounting principles, find it much convenient and easier to maintain their business records under this system.

Less time consuming: Maintaining books according to the single entry system is less time consuming, as only few books are to be maintained. Further, the books are not as comprehensive as they are under double entry system.

Less expensive: It is an economical mode of maintaining records, as there is no need to appoint specialised accountant.

Flexible: Owner may record transactions as per his/her own needs. It can be easily adjusted or changed whenever needed.

Question 3.
Distinguish between statement of affairs and balance sheet.
Answer:

Statement of Affairs Balance Sheet
It is less reliable as it is prepared from incomplete records It is more reliable
The objective is to estimate the balance in capital The objective is to show the true financial position
Omission of assets or liabilities cannot be discovered Omission of assets or liabilities can be discovered

Question 4.
What practical difficulties are encountered by a trader due to incompleteness of accounting records?
Answer:
The following are the difficulties that are encountered by a trader due to incompleteness of accounting records.
Accuracy of accounts: Arithmetical accuracy of accounts can not be ascertained, since proper records of accounts are not maintained. Consequently, Trial Balance cannot be prepared.

Encourages fraud: As the arithmetical accuracy cannot be determined; so, this encourages – fraud and provides sufficient scope for bluffing and carelessness.

Difficult to ascertain correct profit or loss: Since all expenses and income are not recorded, true profit or loss cannot be correctly ascertained.

Difficult to analyse the true financial position: As profit or loss cannot be ascertained easily, so the Balance Sheet cannot be easily prepared. Hence, the absence of Balance Sheet will not reflect the true financial position of the business.

Difficulty in comparison: Due to the incomplete records and non-availability of previous years’ data, comparison is not possible. By the same token, comparisons with other firms are also not possible.

Unacceptable to tax authorities: It does not reflect the true and acceptable presentation of expenses and revenues. Hence, these are not acceptable by the tax authorities.

Raising funds: Since analysis of solvency, profitability and liquidity of business cannot be done, it is difficult to raise fund ffdm outside.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Long Questions and Answers

Question 1.
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?
Answer:
A Statement of Affairs resembles Balance Sheet; however, it is not called a Balance Sheet. The statement of affairs is a Statement of Assets and Liabilities. The main difference between a Statement of Affairs and a Balance Sheet is that while the former is prepared on the basis of physical counts and improper source documents, the latter is prepared purely on the basis of ledger accounts.

Thus, the authentication and relevance of the latter is guaranteed. The excess of assets over liabilities (i.e., balancing figure) is denoted as the capital of the firm. The performa of the statement of affairs is presented below.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 1
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 2
When liabilities are more than assets, then the balancing figure is denoted by Capital- Deficiency in the assets side of the statement of affairs.

When the assets’ balance exceeds liabilities’ balance, the balancing figure is denoted by Capital in the liabilities side of the statement of affairs.

For ascertaining profit or loss, if capital in the beginning is not given, then opening statement of affairs is prepared in order to calculate the capital in the beginning. Once the opening capital and closing capital is calculated, a Statement of Profit or Loss is prepared to determine the amount of profit earned or loss incurred during the accounting period.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 3

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 2.
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.
Answer:
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 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.

  • Opening Capital
  • ClosingCapital
  • Credit Purchases
  • Cash Purchases
  • Credit Sales
  • Cash Sales
  • Payment from Debtors
  • Payment to Creditors
  • Opening Stock
  • Closing Stock

Below given are the steps included in the conversion method in a chronological order.

  • If opening capital is not given, then the first step is to prepare opening Statement of Affairs that gives the Opening Capital.
  • The second step is to prepare Cash Book that gives the opening or the closing cash and bank balance.
  • The next step is to prepare Total Debtors Account. It is prepared in order to find out one of the missing figures, such ascredit sales, opening debtors, closing debtors and cash received from debtors.
  • The subsequent step is to prepare Total Creditors Account to ascertain one of the missing figures, such as credit sales, opening creditors, closing creditors and cash paid to the creditors.
  • 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.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 3.
Explain how the following may be ascertained from incomplete records:
1. Opening capital and closing capital
2. Credit sales and credit purchases .
3. Payments to creditors and collection from debtors
4. Closing balance of cash.
Answer:
1. Opening capital and closing capital: Opening capital can be ascertained by preparing opening statement of affairs at the beginning of the accounting period and closing capital can be ascertained by preparing closing Statement of Affairs at the end of the accounting period.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 4
When liabilities are more than assets, capital appears in assets side, as it is balancing figure.
When the assets’ balance exceeds liabilities’ balance, the balancing figure is denoted by capital in the Liabilities side of the Statement of Affairs.

2. Credit Sales and Credit Purchases: Credit sales are ascertained as the balancing figure of the Total Debtors Account and Credit Purchases are ascertained as the balancing figure of the Total Creditors Account.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 6

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

1st PUC Accountancy Accounts from Incomplete Records Numerical Questions and Answers

Question 1.
Following information is given below prepare the statement of profit or loss:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 7
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 8

Question 2.
Manveer started his business on January 01, 2013 with a capital of Rs 4,50,000. On December 31, 2013 his position was as under:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 9
He owned Rs 45,000 from his friend Susheel on that date. He withdrew Rs 8,000 per month for his household purposes. Ascertain his profit or loss for this year ended December 31, 2013.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 10
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 11

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 3.
From the information given below ascertain the profit for the year:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 12
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 13
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 14

Question 4.
From the following information, calculate capital at the beginning:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 15
Answer:
Capital in the beginning = Capital at the end + Drawings- (Fresh Capital Introduced + Profit)
= 4,00,000 + 60,000 – (1,00,000 + 80,000)
= Rs 2,80,000
Note: As per the solution, the profit should be of Rs 2,80,000; but, the answer given in the book is Rs 2,60,000.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 5.
Following information is given below: calculate the closing capital
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 16
Calculation of profit or loss and ascertainment of statement of affairs at the end of the year (Opening Balance is given)
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 17
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 18
Capital on December 31, 2013 (Closing) is Rs 20,000
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 19

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 6.
Mrs Anu started firm with a capital of Rs 4,00,000 on 1st July 2013. She borrowed from her friends a sum of Rs 1,00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital Rs 75,000 on Dec. 31, 2013, her position was :
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 20
He withdrew Rs 8,000 per month, for the year. Calculate profit or loss for the year and show your working clearly.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 21

Question 7.
Mr. Arnav does not keep proper records of his business he provided following information, you are required to prepare a statement showing the profit or loss for the year.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 22
Ascertainment of statement of affairs at the beginning añd at the end of the year and calculation of profit or loss.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 23
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 24

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 8.
Mr. Akshat keeps his books on incomplete records following information is given below:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 25
During the year he withdrew Rs 45,000 and introduced Rs 25,000 as further capital in the husiness compute the profit or loss of the business.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 26
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 27

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 9.
Gopal does not keep proper books of account. Following information is given below:
1st PUC Accountancy Question Bank C
During the year he introduced Rs 20,000 and withdrew Rs 12,000 from the business. Prepare the statement of profit or loss on the basis of given information
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 29

Note: As per the solution, the profit during the year should be Rs 37,500; whereas, the profit given in the book is Rs 53,500.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 10.
Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 31
He withdrew Rs 300 per month for personal expenses. He sold his investment of Rs 16,000 at 2% premium and introduced that amount into business.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 32
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 33
Working Note:
Additional Capital Introduced = 16,000 × \(\frac { 102 }{ 100 }\)
= 16,320

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 11.
Mr. Girdhari Lai does not keep full double entry records. His balance as on January 01, 2013 is as.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 34
His position at the end of the year is:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 35
He Withdrew Rs 500 per month out of which to spent Rs 1,500 for business purpose. Prepare the statement of profit or loss.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 36
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 37

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 12.
Mr. Ashok does not keep his books properly. Following information is available from his books.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 38
During the year Mr. Ashok sold his private car for Rs 50,000 and invested this amount into the business. He withdrew from the business Rs 1,500 per month upto July 31, 2013 and thereafter Rs 4,500 per month as drawings. You are re¬quired to prepare the statement of profit or loss and statement of affair as on December 31, 2013.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 39
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 40

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 13.
Krishna Kulkarni has not kept proper books of accounts prepare the statement of profit or loss for the year ending December 31, 2013 from the following information:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 41
The following adjustments were made:
(a) Krishna withdrew cash Rs 5,000 per month for private use.
(b) Depreciation @ 5% on car and furniture @10%.
(c) Outstanding Rent Rs 6,000.
(d) Fresh Capital introduced during the year Rs 30,000.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 42
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 43

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 14.
M/s Saniya Sports Equipment does not keep proper records. From the following information find out profit or loss and also prepare balance sheet for the year ended December 31, 2013
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 44
Drawing Rs 10,000 p.m. for personal use, fresh capital introduce during the year Rs 2,00,000. A bad debts of Rs 2,000 and a provision of 5% is to be made on debtors outstanding salary Rs 2,400, prepaid insurance Rs 700, depreciation charged on furniture and machine @ 10% p.a.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 45
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 46
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 47

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 15.
From the following information calculate the amount to be paid to creditors:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 48
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 49
Amount paid to Creditors is Rs 4,40,175.

Question 16.
Find out the credit purchases from the following:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 50
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 51
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 52
Credit Purchases Rs 56,350

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 17.
From the following information calculate total purchases.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 53
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 54
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 55
Total Purchases = Cash Purchases + Credit Purchases (as per Creditors Account)
= 1,29,000 + 2,01,500
= Rs 3,30,500

Question 18.
The following information is given
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 56
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 57

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 19.
From the following, calculate the amount of bills accepted during the year.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 57
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 59

Question 20.
Find out the amount of bills matured during the yeair on the basis of information given below;
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 60
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 61
Bill Payable matured during the year is Rs 38,000.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 21.
Prepare the bills payable account from the following and find out missing figure any:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 61
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 63
Bills payable discharged is Rs 88,000 and the opening balance of creditors is Rs 79,000.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 22.
Calculate the amount of bills receivable during the year.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 64
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 65
Bills receivable received from Debtors Rs 1,60,000.

Question 23.
Calculate the amount of bills receivable dishonoured from the following information.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 66
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 67
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 68
Bills Receivable dishonoured is Rs 11,500.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 24.
From the details given below, find out the credit sales and total sales.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 69
Answer:
1st PUC Accountancy Question Bank C
Credit sales is Rs 2,82,300
Total Sales = Cash Sales + Credit Sales
= 80,000 + 2,82,300
= Rs 3,62,300

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 25.
From the following information, prepare the bills receivable account and total debtors account for the year ended December 31, 2013.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 71
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 72
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 73
The missing figure in the bills receivable account @ B/R received from debtors Rs 1,61,000 and the missing figure in the debtors account @closing balance is Rs 3,01,000.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 26.
Prepare the suitable accounts and find out the missing figure if any.
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 74
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 75
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 76
Note: As per solution, the missing figure in the bills receivable account is B/R dishonoured of Rs 40,000. The missing figure in the debtors account is the credit sales of Rs 6,21,000, However, the NCERT book shows a credit sales Rs 5,16,000.

In order to match our answer with that of the book, B/R received from the customers is not shown in the debtors account.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 27.
From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 77
The rate of. gross profit is 25% on selling price and out of the total sales Rs 85,000 was for cash sales. (Hint: Total sales = 4,00,000 = 3,00,000 × 100 × \(\frac { 100 }{ 75 }\))
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 78
Opening balance of debtors is Rs 54,000 and the closing balance of creditors is Rs 1,78,500.
Working Notes:
Total Sales  = Cash Sales + Credit Sales
Total Sales = Cost of Goods Sold + Gross Profit Cost of Goods Sold
= Opening Stock + Purchases @ Closing Stock
= 30,000 + 2,95,000 @25,000
= Rs 3,00,000
Let sales be 100%
Sales = Cost of Goods sold + Gross Profit
Or,
100 = Cost of Goods sold + 25%
Cost of Goods Sold = 100% – 25% = 75%
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 79
Sales = Cost of Goods Sold + Gross Profit
= 3,00,000 + 1,00,000
= Rs 4,00,000
= Rs 3,15,000 + 85,000
= Rs 3,15,000
Note: Here, it has been assumed that all purchases were made on credit.

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records

Question 28.
Mrs Bhavana keeps his books by Single Entry System. You.re required to prepare final accounts of her business for the year ended December 31, 2013. Her records relating to cash receipts and cash payments for the above period showed the following particulars:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 80
The following information is also available:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 81
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 82
All her sales and purchases were on credit. Provide depreciation on plant and building by 10% and machinery by 5%, make a provision for bad debts by 5%.
Answer:
1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 83

1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records
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1st PUC Accountancy Question Bank Chapter 11 Accounts from Incomplete Records 85