Important Questions Class 11 Accountancy Chapter 11- Accounts from Incomplete Records
Accountancy is an important subject in Class 11 which will be very useful for any commerce or management courses in future. Many small ventures do not maintain records as per the double bookkeeping system. Chapter 11 of Accounts from Incomplete Records is essential as it deals with the profit or loss ascertainment for ventures that don’t maintain records per the double entry system or otherwise have incomplete records.
Here the students will learn to make the “Statement of Affairs”, understand the difference between a Statement of Affairs and a Balance sheet, and prepare relevant accounts to find the missing information. A great aid to students can be the Important Questions Class 11 Accountancy Chapter 11 provided by Extramarks which can help them brush up on the concepts mentioned above and practise before their examinations.
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Important Questions Class 11 Accountancy Chapter 11 with Solutions
Chapter 11 introduces a different approach to ascertaining profit and loss calculations for firms with incomplete records or those that do not follow the double-entry bookkeeping system. For this reason, studying the Important Questions Class 11 Accountancy Chapter 11 is imperative to grasp the essential concepts and practise the practical questions.
Here are some of the Important Questions Class 11 Accountancy Chapter 11 with solutions for student’s revision:
Question 1. A system of accounting which isn’t based on a double entry system is known as-
- cash system
- mahajani system of accounting
- incomplete accounting system
- none of these.
Answer 1: c) incomplete Accounting System.
Explanation: Incomplete accounting system is one in which a single entry system of bookkeeping is used, or the business venture keeps an incomplete account of records.
Question 2. ______ is the statement of assets and liability under the single entry system.
Answer 2: A statement of affairs is the statement of assets and liability under a single entry system.
Question 3. State two accounts maintained from incomplete records.
Answer 3: The two accounts that are kept in the books using incomplete records are:
- Cash account
- Personal Account
Question 4. Trial balance can be prepared from incomplete records. State true or false.
Answer 4: False. As it doesn’t record the accounts of expenses, income, assets, and obligations, it is impossible to produce a trial balance when a venture maintains incomplete records.
Question 5. Distinguish between the statement of affairs and the balance sheet.
Answer 5: The points of distinction between the statement of affairs and balance sheet are below:
| |
| Basis of Difference |
Statement of Affairs |
Balance Sheet |
| Meaning |
It is a statement representing a business entity’s assets, liabilities, and capital based on a single entry system of bookkeeping. |
It is a statement of a corporate entity’s assets, liabilities, and capital that is created using the double entry method of bookkeeping. |
| Reliability |
It is not reliable as the data is based on estimates. |
It proves more reliable as it is created based on a tested data entry method. |
| Accounting Method |
Statement of Affairs is prepared from incomplete records. |
A balance sheet is prepared from a double entry system of bookkeeping. |
| Accuracy |
It shows a less accurate position. |
It shows a largely accurate position. |
Question 6. What is meant by the ‘statement of affairs? How can the profit or loss of a venture be ascertained with the help of a statement of affairs?
Answer 6: Statement of Affairs is similar to a Balance Sheet; it is the statement of assets and liabilities of the business enterprise. A statement of affairs differs from a balance sheet because the statement of affairs is prepared based on improper source documents.
The company’s capital is the difference between assets and liabilities (also known as the balancing amount). The statement of affairs format is shown below.
| Statement of Affairs as of |
| Liabilities |
Amount
Rs |
Assets |
Amount
Rs |
| Bills Payable |
– |
Land and Building |
– |
| Creditors |
– |
Plant and Machinery |
– |
| Outstanding Expense |
|
Furniture |
|
| Capital (Balancing Figure)@ |
|
Stock |
– |
| |
|
Debtors |
– |
| |
|
Cash and Bank |
– |
| |
|
Prepaid Expenses |
– |
| |
|
Capital-Deficiency (Balancing Figure, if any)* |
|
| |
|
|
|
| |
|
|
|
When liabilities exceed assets, the capital deficit is indicated as the balancing figure on the asset side of the statement of affairs. When the balance of assets exceeds the balance of liabilities, capital is shown on the liabilities side of the statement of affairs as the balancing figure.
Suppose the capital, in the beginning, is not provided. In that case, the opening statement of affairs is prepared to determine the capital in the beginning and is used to determine profit or loss.
A Statement of Profit or Loss is created after the opening and closing capital have been calculated. Statement of Profit and Loss helps to identify how much profit or loss is incurred during the accounting period.
| Statement of Profit or Loss for the year ended |
| Particulars |
Amount
Rs |
| Closing capital at the end of the year |
– |
| |
Add: Drawings made during the year |
– |
| |
Less: Additional capital introduced during the year |
– |
| Adjusted capital at the end of the year |
– |
| |
Less: Capital in the beginning of the year |
– |
| |
Profit (Loss) for the year |
– |
| |
(Balancing figure) |
|
Question 7. Explain how the following are calculated from incomplete records:
- Opening capital and closing capital
- Credit sales and credit purchases
- Payments to creditors and collection from debtors
- The closing balance of cash.
Answer 7:
- Opening Capital and Closing Capital:
The value of opening capital can be calculated by creating an opening statement of affairs at the beginning of the accounting period. The value of closing capital can be calculated by making a closing statement of affairs.
| Statement of Affairs as of
|
| Liabilities |
Amount
₹ |
Assets |
Amount
₹ |
| Bills Payable |
– |
Land and Building |
– |
| Creditors |
– |
Plant and Machinery |
– |
| Outstanding expenses |
– |
Furniture |
– |
| Opening Capital (Balancing Figure)* |
– |
Stock |
– |
|
|
Debtors |
– |
|
|
Bank
Cash |
– |
|
|
Prepaid Expenses |
– |
|
|
Opening Capital (Balancing Figure)* |
– |
- Credit Sales & Credit Purchases:
Credit sales are missing from incomplete records. Hence, it is necessary to prepare a total debtor’s account to evaluate it. The total debtor’s account must be reduced by the full sales return, if any. The balancing figure provides the credit sales.
Similarly, preparing a total creditor account is essential to analyse credit purchases. The total amount of creditors’ accounts should be reduced by the total purchase returns. The balance amount represents the credit purchase.
| Total Debtors Account |
| Dr. |
|
|
|
|
Cr. |
| Particulars |
J.F. |
Amount
₹ |
Particulars |
J.F. |
Amount
₹ |
| Balance b/d |
|
– |
Cash (Cash Received) |
|
– |
| Bills Receivable |
|
– |
Bank (Cheque Received) |
|
– |
| (Bill Dishonoured) |
|
|
Discount Allowed |
|
– |
| Bank (Cheque Dishonoured) |
|
– |
Bad Debts |
|
– |
| Credit Sales (Balancing Figure) |
|
– |
Sales Returns |
|
– |
|
|
|
Bills Receivable
(Bill Received) |
|
– |
|
|
|
Balance c/d |
|
– |
| Total Creditors Account |
| Dr. |
|
|
|
|
Cr. |
| Particulars |
J.F. |
Amount ₹ |
Particulars |
J.F. |
Amount
₹ |
| Cash Paid |
|
– |
Balance b/d |
|
– |
| Bank (Cheque Issued) |
|
– |
Bank
(Cheque Dishonoured) |
|
– |
| Bills Payable (Bills Accepted) |
|
– |
Bills Payable (Bills Dishonoured) |
|
– |
| Discount Received |
|
– |
Credit Purchases |
|
– |
| Purchases Returns |
|
– |
(Balancing Figure ) |
|
– |
| Balance c/d |
|
– |
|
|
|
- Payment to Creditors and Collection from Debtors:
When determining the payment to creditors, a total creditors account is prepared. The payment to creditors is then determined by subtracting the total amount of purchase returns from the balancing figure, while the total debtors account determines the collection from debtors; the collection from debtors is then determined by subtracting the total amount of sales returns from the balancing figure.
- The closing balance of cash :
Preparing a cash book summary is required to assess the closing cash balance. All receipts from debit and all payments made within that time are also included in the cash book summary, and the balancing figure shows the balance. The total creditor or total debtor accounts are necessary if the amount paid to creditors or collected from debtors is not present.
Question 8. What are the difficulties faced by companies due to incomplete records?
Answer 8: The following are the difficulties the companies face due to incomplete records:
- The accuracy of the accounts cannot be evaluated because a trial balance cannot be derived.
- It is challenging to convince tax authorities that the computation on the record is accurate.
- It is impossible to generate a financial statement from incomplete records.
- Insurance claims are difficult to submit with missing documentation.
Question 9. Manveer started a business on April 01 2016, with a capital amounting to Rs. 4 50,000. On March 31, 2017, his firm’s position was as below :
| |
₹ |
| Cash |
99,000 |
| Bills receivable |
75,000 |
| Plant |
48,000 |
| Land and Building |
1,80,000 |
| Furniture |
50,000 |
He owed ₹ 45,000 from his friend Susheel on that date. He withdrew ₹ 8,000 per month for household purposes. Ascertain the profit or loss for this year ended March 31, 2017.
Answer 9:
| Books of Manveer
Statement of Affairs as of March 31, 2017 |
| Liabilities |
Amount ₹ |
Assets |
Amount ₹ |
| Loan from Susheel |
45,000 |
Cash |
99,000 |
|
|
Bills Receivable |
75,000 |
|
|
Plant |
48,000 |
| Closing Capital
(Balancing Figure) |
4,07,000 |
Land and Building |
1,80,000 |
|
|
Furniture |
50,000 |
|
|
|
|
|
4,52,000 |
|
4,52,000 |
| Statement of Profit and Loss as of March 31, 2017 |
| Particulars |
₹ |
| Capital on March 31, 2017 |
4,07,000 |
| Add: Drawings during the year (₹ 8,000 × 12) |
96,000 |
| Less: Capital on April 01, 2016 |
(4,50,000) |
|
|
| Profit during the year 2017 |
53,000 |
Question 10. Mr Arnav doesn’t keep proper records of his business. He provides the following information, and you are required to prepare a statement showing the profit or loss for the year.
| |
₹ |
| Capital at the beginning of the year |
15,00,000 |
| Bills receivable |
60,000 |
| Cash in hand |
80,000 |
| Furniture |
9,00,000 |
| Building |
10,00,000 |
| Creditors |
6,00,000 |
| Stock in trade |
2,00,000 |
| Further capital introduced |
3,20,000 |
| Drawings made during the period |
80,000 |
Ascertain the statement of affairs at the beginning and end of the year and calculate the profit or loss.
Answer 10:
| Books of Mr. Arnav
Statement of Affairs at the end of year |
| Liabilities |
Amount
₹ |
Assets |
Amount
₹ |
| Creditors |
6,00,000 |
Bills Receivable |
60,000 |
| Capital (Balance figure) |
16,40,000 |
Cash in Hand |
80,000 |
|
|
Furniture |
9,00,000 |
|
|
Building |
10,00,000 |
|
|
Stock in Trade |
2,00,000 |
|
|
|
|
|
22,40,000 |
|
22,40,000 |
| Statement of Profit and Loss |
| Particulars |
Amount
₹ |
| Capital at the end of the year |
16,40,000 |
| Add: Drawings during the year |
80,000 |
| Less: Capital at the beginning of the year |
(15,00,000) |
| Less: Further capital introduced |
(3,20,000) |
|
|
| Loss during the year |
1,00,000 |
Question 11. Calculate the value of profit earned during the period of opening capital is ₹ 50,000, drawings is ₹ 5,000, additional capital introduced during the period is ₹ 20,000, closing capital ₹ 1,00,000.
Answer 11:
| Particular |
Amount |
Amount |
| Ending capital
Add: Drawings during the year
Less: Additional capital introduced during the year
Adjusted capital at the end of year
Less: beginning capital Profit during year |
100000
5000
20000
50000 |
85000
35000 |
Hence profit at the beginning of the year is Rs. 35000
Question 12. From the following information calculate the amount to be paid to creditors:
| |
₹ |
| Sundry creditors as of March 31, 2017 |
1,80,425 |
| Discount received |
26,000 |
| Discount allowed |
24,000 |
| Return outwards |
37,200 |
| Return inward |
32,200 |
| Bills accepted |
1,99,000 |
| Bills endorsed to creditors |
26,000 |
| Creditors as of April 01, 2016 |
2,09,050 |
| Total purchases |
8,97,000 |
| Cash purchases |
1,40,000 |
Answer 12 : The creditors account is as follows:
| Creditors Account |
| Dr. |
Cr. |
| Particulars |
Amount
₹ |
Particulars |
Amount
₹ |
| Discount Received |
26,000 |
By Balance b/d |
1,80,425 |
| Return Outwards |
37,200 |
Purchases – credit |
|
| Bills accepted |
1,99,000 |
(8,97,000 – 1,40,000) |
7,57,000 |
| B/R (endorsed to creditors) |
26,000 |
|
|
| Balance c/d |
2,09,050 |
|
|
|
|
|
|
| Cash/Bank (Balancing figure) |
4,40,175 |
|
|
|
|
|
|
|
9,37,425 |
|
9,37,425 |
Benefits of Solving Important Questions Class 11 Accountancy Chapter 11
The chapter on Accounts from Incomplete Records deals with the ascertainment of profit and loss for business ventures that do not maintain complete records. This chapter is among the final chapters for Class 11.It teaches students what needs to be done in such a situation. Practising from the list of Important Questions Class 11 Accountancy Chapter 11 will help students gain a good grasp of the chapter, which will help them during their examinations.
Following are the benefits of practising from the Accountancy Class 11 Chapter 11 Important Questions:
- Subject experts prepare the questions and solutions with years of experience in the field of Accountancy; hence the students can trust and rely on the study material.
- The Chapter 11 Class 11 Accountancy Important Questions are created from essential sections of the chapter; practising them will help the students revise the entire chapter for the examination.
- The questions are made according to the latest CBSE guidelines so that students can access relevant materials when they study, prepare and revise the chapter.
- These questions may have a higher chance of appearing in the papers; therefore, reviewing them can help students prepare for their exams.
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