Tag: meaning of incomplete records, reasons for incompleteness and its limitations

Questions Related to meaning of incomplete records, reasons for incompleteness and its limitations

Incomplete record mechanism of book keeping is ___________.

book keeping and accountancy single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs

  1. Scientific

  2. Unscientific

  3. Unsystematic

  4. Both (b) and (c)

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Correct Option: C
Explanation:

Book keeping is an unsystematic method of recording transactions.It is observed, that many businessmen keep incomplete records because of the following reasons : 

(a) This system can be adopted by people who do not have the proper knowledge of accounting principles; 
(b) It is an inexpensive mode of maintaining records.

Under single entry system, there is no provision to make adjustments, while under double entry system, adjustments are made at the time of preparing final accounts.

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. True

  2. False

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Correct Option: A
Explanation:

Preparation of the profit and loss account cannot be prepared through the information assembled through the single entry system. This means that this system cannot help the organization to determine its financial position because there is no provision to make adjustments.

On the other hand, the double entry system of recording financial transactions of the organization is useful in the preparation of trading profit and loss accounts as adjustments are made at the time of preparing final accounts.

_____________ has defined Single Entry System as, 'A system of book keeping in which as a rule only records of cash and personal accounts are maintained, it is always incomplete double entry varying with the circumstances."

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. Kohler

  2. Smith and Ashburne

  3. L.C. Copper

  4. Institute of Charted Accountants of India (ICAI)

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Correct Option: A

Under double entry system both aspects of transaction are recorded, while Under single entry system, both aspects of transaction are not recorded.

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

In single entry system, incomplete records are maintained while in double entry system complete recording of transactions is there. In single entry system comparison between two accounting periods is very difficult.

Company accounting conforms more to dual aspect concept than to incomplete recording system because.
I. Companies Act insists upon the adoption of double entry systems of book keeping.
II. Balance sheet could not be prepared under sec. $211$ of Company's Act according to the incomplete recording system
III. To show true and fair view of the affairs of the company
IV. To ensure adequate disclosure.
Select the correct answer from the codes given and mark your answer sheet accordingly.

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. I and II

  2. II and III

  3. II, III and IV

  4. I, II and III

Show answer
Correct Option: D
Explanation:

The dual aspect concept states that every business transaction requires recordation in two different accounts. This concept is the basis of double entry accounting, which is required by all accounting frameworks in order to produce reliable financial statements.

Which of the following are prepared by the organisations keeping only incomplete accounting records?
I. Cash book
II. Customer's Accounts
III. Expenses Accounts
IV. Day Books
Choose the correct answer using the codes given.

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. I, II and III

  2. I, II and IV

  3. I, III and IV

  4. II, III and IV

Show answer
Correct Option: B
Explanation:

A single entry book-keeping system or single-entry accounting system is a method of bookkeeping relying on a one sided accounting entry to maintain financial information.

In single entry system following things are prepared:

1. Cash book - to record all cash transaction

2. Customer's book - to record balances of debtors

3. Day Books - in which all day to day transactions or activities are recorded

4. Statement of profit and loss to arrive at profit or loss.

5. Statement of affairs to arrive at closing capital at the year end.

Generally incomplete records are maintained by ____________.

commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. Trader

  2. Company

  3. Society

  4. Government

Show answer
Correct Option: A
Explanation:

As Profit or loss under single entry system is ascertained by the difference between Closing and Opening Capitals it make convenient for small traders to follow single entry system due to following features:
a) Hassle free
b) no need for maintaining books of accounts
c) special knowledge of double entry system is not required.

Under single entry system "profit" = closing capital - _________________.

commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. Opening capital

  2. Opening assets

  3. Opening liabilities

  4. Drawings

Show answer
Correct Option: A
Explanation:

Suppose Opening Capital (i.e capital on the 1st day of financial year) is Rs. 50,000 and Closing Capital ( i.e capital on the last day of financial year ) is Rs. 70,000. the resulting difference is more by Rs. 20000 indicating a positive increment in capital called Profit.

Single entry system is most popular for ____________.

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. Sole trader

  2. Government

  3. Company

  4. All of the above

Show answer
Correct Option: A
Explanation:

Normally Single entry system is maintained by small traders as it do not require special set of book-keeping and expert accounting knowledge. Hence, it becomes hassle free for traders to ascertain their profit of loss earned by the business through single entry system.

An accounting system where debit and credit rule is not followed.

commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

  1. Double entry system

  2. Single entry system

  3. Financial accounting

  4. Book keeping accountancy

Show answer
Correct Option: B
Explanation:

A system were Profit or loss earned by the business  is based on the difference between its Opening and closing capital. is called Single entry system
In order to find the  capitals , Statement of affairs are prepared which are based on an equation Capital = Assets - Liabilities
Hence, basic accounting aspects of debit and credit are not followed.