This GSEB Class 11 Commerce Accounts Notes Part 2 Chapter 10 Accounts from Incomplete covers all the important topics and concepts as mentioned in the chapter.
Accounts from Incomplete Class 11 GSEB Notes
Small traders like hawkers, street-venders, Small shopkeepers or small retailers do not keep the complete form of accounts, because their utility is very limited. On the basis of their need, they keep their accounts with incomplete records. This type of incomplete system of accounting is known as single entry system. In fact, single entry system is not an independed method of keeping books of accounts. This method does
not have its own rules to be followed. Under this system only personal accounts and cash account are maintained in the ledger. Impersonal accounts (Real accounts and Nominal accounts) are not opened in the ledger. There is no accuracy in this method, as in double entry system. Single entry system is an incomplete form of accounts, due to this reason, it is also known as accounts from incomplete records.
→ Single entry system means incomplete accounts. Small traders keep a few books of accounts like cashbook and ledger as per their requirements.
→ There are two methods of ascertaining profit/loss under this system :
- Statement of affairs method (Comparison of capital method)
- Conversion of single entry into double entry
→ If the opening capital is not given, opening statement of affairs is prepared.
→ If the closing capital is not given, closing statement of affairs is prepared.
→ Prepare statement showing profit/loss to find out profit or loss:
- Drawings is to be added in the closing capital.
- Additional capital and opening capital are to be subtracted from the closing capital. Prom this procedure gross profit/loss is to be received.
- Net profit/loss will be received after giving the effects of all adjustments.
→ Effects of adjustments:
- Interest on opening capital is calculated for the whole year while on additional capital, it is calculated from the date of the capital is brought in the business.
- Depreciation on opening balance of the assets is calculated for the whole year. Depreciation on assets purchased or sold during the year is calculated in proportion of time from the given date.
- Bad debts and Bad debts reserve are calculated on debtor’s closing balances only.
- Interest on partner’s loan is taken as per the information given or it is calculated at 6 % which is compulsory.
- Interest on drawings is calculated as per given information and given period. o