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Revision Notes

Class 11

Accountancy

Chapter 11 Accounts From Incomplete Records

Accounts from Incomplete Records Class 11 Accountancy Chapter 11 CBSE Notes - 2025-26

Class 11 Accountancy Chapter 11 Summary Notes PDF Download

The young minds always want to learn and achieve something. For those students, the CBSE notes on our official website of Vedantu will become an add on. It has a detailed explanation of each concept in multiple scenarios. Chapter 11 Accounts Class 11 Notes by Vedantu beneficial in clarifying doubts and provides good command on the subject. The website also provides a download option for the students to get physical copies. Students can utilize CBSE Class 11 Accountancy Notes Chapter 11 PDFs and download them for free to study during the exam period.

Students can clarify their doubts while going through the important points in this PDF, which helps in scoring better percentages than before. It is also appreciable to take a hard copy and store it for future use. It avoids unnecessary disturbances like electrical fluctuations and internet disconnections.

Download CBSE Class 11 Accountancy Revision Notes 2025-26 PDF

Also, check CBSE Class 11 Accountancy revision notes for All chapters:

CBSE Class 11 Accountancy Chapter-wise Revision Notes
Chapter 1: Introduction to Accounting Notes	Chapter 2: Theory Base of Accounting Notes
Chapter 3: Recording of Transactions - I Notes	Chapter 4: Recording of Transactions - II Notes
Chapter 5: Bank Reconciliation Statement Notes	Chapter 6: Trial Balance and Rectification of Errors Notes
Chapter 7: Depreciation, Provisions, and Reserves Notes	Chapter 8: Bill of Exchange Notes
Chapter 9: Financial Statements - I Notes	Chapter 10: Financial Statements - II Notes
Chapter 11: Accounts from Incomplete Records Notes	Chapter 12: Applications of Computers in Accounting Notes
Chapter 13: Computerised Accounting System Notes	Chapter 14: Structuring Database for Accounting Notes
Chapter 15: Database Management System Notes

Access CBSE Class 11 Accountancy Chapter-11 Accounts From Incomplete Records Notes

Meaning of Incomplete Records

Incomplete records are the accounting records that do not strictly follow the double entry system of accounting. For example: If one sided entry, or no entry for a transaction is recorded, it is classified as an incomplete record.

Features of Incomplete Records

Many times, small shopkeepers maintain incomplete records due to partial recording of transactions. In case of large organisations, the records may become incomplete due to loss by theft or fire, or due to natural calamities.
The features of incomplete records are as follows:

1) Incomplete records system is not a systematic method of recording transactions due to the partial recording of transactions.

2) In this system, the records for cash transactions and personal accounts are maintained properly, whereas no information is recorded regarding revenue/gains, expenses/losses, or assets and liabilities.

3) Cash books often contain records for the personal transactions of owners.

4) Comparability of accounts is not possible because there is no uniformity among the accounts of different organisations. This is because each organisation maintains records as convenient to them.

5) This system results in increased dependence on original vouchers because figures necessary to ascertain profit/loss or other information can be collected only from the original vouchers such as sales invoice or purchase invoice, etc.

6) The profit/loss for the year ascertained using this system is not highly reliable and accurate because it only provides an estimated profit/loss for the year.

7) The balance sheet at the end of the year does not reflect a true and complete picture of the assets and liabilities in the business because of partial recording of assets and liabilities.

Reasons of Incompleteness and Its Limitations

Many businessmen prefer to keep incomplete records because:

1) Maintaining incomplete records is easier for the people who lack proper knowledge of accounting principles.

2) It is an inexpensive mode of maintaining records because maintaining incomplete records is easier, and specialised accountants charging high costs are not required.

3) It saves time because only a few books need to be maintained.

4) The owners can record only the important transactions and not record the less important transactions as per their needs, making this mode a convenient mode of maintaining records.

Some of the limitations of maintaining incomplete records are:

1) Accuracy of accounts cannot be ensured. This is because the lack of a double-entry system means that a trial balance cannot be prepared to ascertain the accuracy of accounts.

2) The financial results of the business operations cannot be correctly ascertained and evaluated because reliable financial statements cannot be prepared.

3) Due to lack of reliable financial statements,important analysis such as analysis of profitability, liquidity, and solvency of the business cannot be made.

4) Lack of financial reliable statements and proper analysis makes it difficult to raise funds from external sources. This causes issues in planning future business activities.

5) It is difficult for the owners to claim insurance in case of loss of inventory by theft or due to fire.

6) The tax authorities cannot be convinced easily about the reliability of the computed income.

Statement of Affairs

If incomplete records are maintained, then the amount of change in the capital during the period is ascertained by preparing theStatement of asset and liabilities as at the beginning and at the end of the relevant accounting period. This statement is called theStatement of Affairs, which shows the assets and liabilities, just like a balance sheet.

The basic format of a Statement of Affairs is shown as follows:

Statement of Affairs as at _____

Liabilities

Amount (Rs.)

Assets

Amount (Rs.)

Bills Payable

Creditors

Outstanding Expenses

Capital (balancing figure)

Land and Building

Machinery

Furniture

Stock

Debtors

Cash and Bank

Prepaid Expenses

Capital (balancing figure)

xxxx

Difference between Statement of Affairs and Balance Sheet

The following table shows the fundamental differences between a Statement of Affairs and a Balance Sheet.

Basis of difference	Statement of Affairs	Balance Sheet
Reliability	The Statement of Affairs is less reliable because it is constructed using incomplete records that do not follow the Double-Entry system of bookkeeping.	The Balance Sheet is more reliable because it is constructed using records that follow the Double-Entry system of bookkeeping.
Objective	The Statement of Affairs is prepared to ascertain the amount of capital at the beginning of the year, or on a particular date.	The Balance Sheet is prepared to show the true and complete financial position of a business entity on a particular date.
Omission	If some assets or liabilities are omitted from the records, it is not easy to discover the ones that are not recorded.	If some assets or liabilities are omitted from the records, it is easy to discover them from the accounting records in the books.

Statement of Profit and Loss

The difference between the opening and closing capital, as ascertained using the Statement of Affairs,represents the increase or decrease in capital. This increase or decrease is to be adjusted for any additional capital brought in, or any drawings taken out by the owners, to ascertain the profit/loss made during the period.

The Statement of Profit or Loss is prepared to make the necessary adjustments and thus, determine the exact amount of profit or loss made during the year.

The basic format of a Statement of Profit or Loss is shown as follows:

Statement of Profit or Loss for the year ended _____

Particulars	Amount (Rs.)
Capital as at the end of the year (computed from statement of affairs as at the end of the year) Add: Drawings during the year Less: Additional capital introduced during the year	xxxx xxxx (xxxx)
Adjusted capital at the end of the year	xxxx
Less: Capital as at the beginning of the year (computed from statement of affairs as at the beginning of the year)	(xxxx)
Profit or Loss made during the year	xxxx

The following equation shows the same computation as performed in the Statement of Profit or Loss.

\[Profit/Loss = Capital\:at\:End\:-\:Capital\:at\:Beginning\:+\:Drawing\:During\:the\:Year\:\]

\[-\:Additional\:Capital\:Introduced\:During\:the\:Year\]

Preparing Trading and Profit and Loss Account and the Balance Sheet

To prepare the proper and complete financial statements, complete information regarding details of various items is required. However, when incomplete records are maintained, the details of some items need to be ascertained using the logic of the double entry system of bookkeeping. This involves preparing a summary of cash, ledger accounts, etc. to find the balancing figures and use these details to prepare the financial statements.

The most common items missing from the records that need to be ascertained indirectly are:

Opening capital
Credit purchases
Credit sales
Bills payable accepted
Bills receivable received
Payments to creditors
Payments to debtors
Any other cash/bank related items

Ascertaining Credit Purchases

When incomplete records are maintained, some information related to the creditors might be missing. The missing information may be either credit purchases, payment made to creditors, or any other figure.

The missing figure can be ascertained by preparing the total creditors account, entering the given information related to the creditors in the account, and determining the balancing figure. The balancing figure provides the required missing information related to the creditors.

Ascertainment of Credit Sales

Similar to ascertainment of credit purchases, some information related to the debtors might be missing. The missing information may be either credit sales, payment received from debtors, or any other figure.

The missing figure can be ascertained by preparing the total debtors account, entering the given information related to the debtors in the account, and determining the balancing figure. The balancing figure provides the required missing information related to the debtors. Any bill or cheque dishonoured is debited to the total debtors account.

Ascertainment of Bills Receivable and Bills Payable

In many cases, some information related to bills receivable or bills payable is missing. Even if all details related to the bills are available, it may happen that the figures of bills received and bills accepted during the accounting period are not given. To ascertain such figures, the total bills receivable account, or the total bills payable account is prepared, depending upon what figure is to be ascertained.

Ascertainment of Missing Information through Summary of Cash

A summary of the Cash Book is prepared to ascertain any missing figure related to cash transactions. It can be used to ascertain the missing amount paid to creditors, the missing amount received from debtors, the missing receipts or payments, or even missing opening and closing balances of the cash or bank.

Sometimes, two figures related to cash might be missing, which cannot be ascertained by just the summary of the cash book. For example, the amount received from debtors and the amount paid to creditors are both missing. In such a case, the total creditors account can be prepared to determine the amount paid to creditors. Then, the balancing figure of the summary of the cash book will represent the amount received from debtors.

It is also possible to prepare the total debtors account first, and then prepare the cash book to ascertain the amount paid to creditors.

Illustration: Mrs. Surbhi started a business on April 01, 2016 with cash Rs. 50,000, furniture worth Rs. 10,000, goods worthRs. 2,000, and machinery worthRs. 20,000. During the year, she further introduced Rs. 20,000 in her business by opening a bank account. From the following information extracted from her books, you are required to prepare final accounts for the ended March 31, 2017.

Particulars

Amount (Rs.)

Receipts from debtors

Cash sales

Cash purchases

Wages paid

Salaries to staff

Trade expenses

Electricity bill of factory

Drawings of Surbhi

Cash paid to creditors

Discount allowed

Discount received

Bad debts written-off

Cash balance at the end of year

57,500

45,000

25,000

5,000

17,500

6,500

7,500

3,000

42,000

1,200

3,000

1,300

20,000

Mrs. Surbhi used goods worth Rs. 2,500 for private purposes, which is not recorded in the books. Depreciation is to be charged on furniture at 10% p.a. and machinery at 20% p.a. The debtors on March 31, 2017 were worth Rs. 70,000, and the creditors Rs 35,000. On the same date, the stock was valued at Rs. 25,000.

Ans: Books of Mrs. Surbhi

Trading and Profit and Loss Account for the year ended march 31, 2017

Expenses/Losses	Amount (Rs.)	Revenues/Gains	Amount (Rs.)
To Opening stock To Purchases: To Cash 25,000 To Credit 80,000 1,05,000 Less: Goods used for private use (2,500) To Wages To Electricity bill of factory To Gross profit c/d	20,000 1,02,500 5,000 7,500 65,000	By Sales 45,000 By Credit 1,30,000 By Closing stock	1,75,000 25,000
	2,00,000		2,00,000
To Salaries To Trade expenses To Discount allowed To Bad debts To Depreciation: Furniture 1,000 Land and Building 4,000 To Net profit (transferred to capital account)	17,500 6,500 1,200 1,300 5,000 36,500	By Gross profit b/d By Discount received	65,000 3,000
	68,000		68,000

Balance Sheet of Mrs. Surbhi as at March 31, 2017

Liabilities

Amount (Rs.)

Assets

Amount (Rs.)

Creditors

Capital 1,00,000

Add: Net profit 36,500

1,36,500

Add: Additional

Capital 20,000

1,56,500

Less: Drawings

Cash 36,000

Goods 2,500 (38,500)

35,000

1,18,000

Cash

Bank

Stock

Debtors

Furniture 10,000

Less: Depreciation (1,000)

Machinery 20,000

Less: Depreciation (4,000)

20,000

13,000

25,000

70,000

9,000

16,000

1,53,000

Working Notes: Total Creditors Account

Dr.							Cr.
Date	Particulars	JF	Amount (Rs.)	Date	Particulars	JF	Amount (Rs.)
	To Cash To Discount received To Balance c/d		42,000 3,000 35,000		By Balance b/d By Purchase credit (balancing figure)		NIL 80,000
			80,000				80,000

Total Debtors Account

Dr.							Cr.
Date	Particulars	JF	Amount (Rs.)	Date	Particulars	JF	Amount (Rs.)
	To Balance b/d To Sales (credit) (balancing figure)		NIL 1,30,000		By Cash By Discount allowed By Bad debts By Balance c/d		57,500 1,200 1,300 70,000
			1,30,000				1,30,000

Statement of Affairs as on March 31, 2016

Liabilities

Amount (Rs.)

Assets

Amount (Rs.)

Capital (balancing figure)

1,00,000

Cash

Stock

Furniture

Machinery

50,000

20,000

10,000

20,000

1,00,000

Summary of Cash

Dr.			Cr.
Receipts	Amount (Rs.)	Payments	Amount (Rs.)
To Balance b/d To Capital (Bank) To Debtors To Sales	50,000 20,000 57,500 45,000	By Purchases By Wages By Salaries By Trade expenses By Electric bill By Drawings By Creditors By Balance c/d – cash By Closing bank (balancing figure)	25,000 5,000 17,500 6,500 7,500 36,000 42,000 20,000 13,000
	1,72,500		1,72,500

Class 11 Accountancy Chapter 11 Accounts From Incomplete Records Notes

Accounts From Incomplete Records Notes Class 11

It is well known that regular accounts can be made using a double-entry method: one side is filled with all debit transactions, and the other side is filled with all credit transactions. Ch 11 Accounts Class 11 has explained another specification while preparing a balance sheet. The records which are not mentioned in the double-entry system that has incomplete records. The entering of these records is nothing but a single entry system. Usually, cash records, information about assets and liabilities, and few expenses are included in these incomplete records.

Features of Incomplete Records

To explain more about these incomplete records, Chapter 11 Accounts Class 11 Solutions Notes describes a few characteristics of such records. These include:

It is not a systematic approach to recording transactions.
All the transactions and information of owners were also recorded.
Different organizations maintain these records due to a lack of uniformity in the double-entry system.
Few transactions related to expenses, losses or gains, etc. were also recorded at times.
The accuracy of profit or loss cannot be assured with this system. It helps to estimate the approximate values of both laws and profit.

Reasons for Incompleteness and its Limitations

The next section is about the importance of incomplete records and the failures of maintaining these records. Class 11 Accounts from Incomplete Records Notes mentions various reasons such as expense, convenience, and techniques adopted by the persons who don't have proper knowledge on accounts. With regards to the drawbacks of the incomplete records, a few of them include lack of accuracy, the requirement of more financial resources, the difficulty faced by owners, etc.

Ascertainment of Profit or Loss

The notes of Accountancy Class 11 Chapter 11 have facilitated that every business organization wants to get certainty of both profit and loss faced in a particular Financial Year. This can be done through two methods or ways. These are also explained in the PDF with detailed examples. They are -

Preparing a statement of affairs. The difference between the statement and the balance sheet is also discussed in the PDF.

Capital = Total Assets - Total liabilities

Preparing trading and profit and loss accounts.

Preparing Trading and Profit and Loss Account

Chapter 11 Accounts From Incomplete Records Class 11 has given clear information about the statement. It involves various transactions like- creditors, debtors, cash purchases, cash sales, etc. Few transactions are also missed which are not to be considered mandatory in the incomplete records. They are - opening balance, credit purchases, credit sales, bills receivable, bills payable, payments to creditors, payments to debtors.

Ascertainment of Credit Purchases

After understanding the statement of affairs and trading and profit loss account, each transaction mentioned in the profit and loss account should be understood clearly. So the PDF available on our official website of Vedantu has specified these topics individually.

Accounts From Incomplete Records Class 11 Notes explain that the exact figure of credit purchases may not be available, and the information related to creditors might be missing several times. So the single entry system provides an ascertain value of credit purchases to maintain the balance sheet.

Ascertainment of Credit Sales

Notes of Accounts From Incomplete Records Class 11 has given that the same rule is applicable for the debtors. That's the reason these incomplete records maintain and a certain value for credit sales also.

Ascertainment of Bills Receivables and the Bills Payables

Here, the complete information regarding the bills receivables and payables were available, but the accurate figures are missing. So to balance these figures, it helps to provide ascertain values.

Ascertainment of Missing Information through a Summary of Cash

Ch 11 Accounts Class 11 explained that a human brain could not remember every single transaction. We use it to mention a summary of cash, including all receipts and bills, to balance the figures in the balance sheet for all the missing information.

FAQs on Accounts from Incomplete Records Class 11 Accountancy Chapter 11 CBSE Notes - 2025-26

1. What is the core concept of 'incomplete records' in Class 11 Accountancy?

Incomplete records refer to an accounting system that does not follow the principles of the double-entry system. It is an unscientific method where, typically, only cash transactions and personal accounts of debtors and creditors are maintained. It fails to record both aspects of every transaction, making it difficult to verify arithmetical accuracy.

2. For a quick revision, what are the main differences between a Statement of Affairs and a Balance Sheet?

While they may look similar, their purpose and reliability differ significantly. The key differences for revision are:

Objective: A Statement of Affairs is primarily prepared to find out the amount of capital, whereas a Balance Sheet is prepared to show the true financial position of the business.
Reliability: A Statement of Affairs is less reliable as it is prepared from incomplete records and estimates. A Balance Sheet is highly reliable as it is based on ledger balances from a double-entry system.
Basis of Preparation: The Statement of Affairs relies on estimates, physical counts, and memory. The Balance Sheet is prepared systematically from ledger accounts.
Accuracy Check: It is difficult to trace omissions in a Statement of Affairs, while a Balance Sheet is supported by a Trial Balance, which helps ensure arithmetical accuracy.

3. How can we summarise the purpose of preparing a Statement of Affairs when dealing with incomplete records?

The primary purpose of preparing a Statement of Affairs is to ascertain the opening and closing capital of a business for an accounting period. By listing estimated assets on one side and liabilities on the other, the balancing figure is determined as capital. This capital figure is the crucial starting point for calculating the estimated profit or loss for the period.

4. What are the key limitations to remember about the incomplete records system?

The main limitations to keep in mind for your revision are: it's impossible to check arithmetical accuracy because a Trial Balance cannot be prepared, it provides an incomplete and unsatisfactory picture of financial performance, it makes fraud easier to commit and harder to detect, and it is generally not accepted by tax authorities or for financial analysis.

5. In the context of Chapter 11, what are the main topics to focus on for a quick revision of Accounts from Incomplete Records?

For an effective revision, focus on three key areas. First, understand the meaning and limitations of incomplete records. Second, master the Statement of Affairs method for calculating estimated profit or loss. Third, understand the process of the Conversion Method, which involves preparing subsidiary accounts (like Total Debtors and Creditors accounts) to find missing figures and then preparing final accounts.

6. Why is the profit calculated using the Statement of Affairs method considered an 'estimate' rather than an exact figure?

The profit is considered an estimate because the entire calculation is based on capital figures derived from the Statement of Affairs, which itself is built on valuations and estimates, not precise ledger balances. Since the underlying records are incomplete and do not follow double-entry rules, omissions and valuation errors can easily occur and go undetected, making the final profit figure an approximation.

7. How do adjustments for drawings and additional capital impact the profit calculation in the Statement of Affairs method?

These adjustments are crucial for correcting the closing capital to find the true profit. Drawings (cash or goods taken for personal use) reduce the capital in the business, so they must be added back to the closing capital. Conversely, additional capital introduced during the year increases the business's capital, so it must be subtracted from the closing capital to avoid overstating the profit earned from operations.

8. When converting incomplete records, what is the role of preparing subsidiary accounts like the Total Debtors and Total Creditors Account?

These subsidiary accounts are essential tools for finding crucial missing figures needed for the final accounts. For example:

A Total Debtors Account is prepared to find out the amount of credit sales made during the year.
A Total Creditors Account helps ascertain the amount of credit purchases.
Similarly, Bills Receivable and Bills Payable accounts can find missing information about bills transactions. These figures are then used to prepare a proper Trading and Profit & Loss Account.

9. What is the fundamental difference in approach between the 'Statement of Affairs method' and the 'Conversion method'?

The fundamental difference lies in their objective and thoroughness. The Statement of Affairs method is a shortcut that aims only to find an estimated profit by comparing opening and closing capital. The Conversion method is a more comprehensive process that involves converting the incomplete records into a full double-entry system. This allows for the preparation of a proper Trading and P&L Account and a Balance Sheet, providing a more accurate and detailed financial picture.

10. Why is it not possible to prepare a Trial Balance from accounts kept under the single-entry system?

A Trial Balance cannot be prepared because the single-entry system violates the core principle of double-entry accounting—that every transaction has a dual aspect (a debit and a credit). Since only some accounts are maintained and the two-fold effect of each transaction is not recorded, the list of debit and credit balances required for a Trial Balance does not exist. This makes it impossible to verify the arithmetical accuracy of the books.