features of incompleted records
Answers
Answer:
Features of Incomplete Records:
The features of incomplete records are as under:
(i) Unsystematic Method:
This is an unsystematic method for recording business transactions in the books of accounts. There are no rules and principles which are applicable for recording business transactions in the case of incomplete records.
(ii) Mixed System for Recording Business Transactions:
Accounting from incomplete records is a mixed system of recording business transactions in which some transactions are recorded as per double entry system and for certain transactions only a single entry is made in the books of accounts. In some cases no recording is made in the books of accounts.
(iii) lack of uniformity : The system of recording business transactions under this mechanism differs from organization to organization as recording is made as per their need and convenience.
(iv) Personal Transactions are Mixed up with Business Transactions:
Personal transactions of the owners are usually mixed up with business transactions. Sometimes it is very difficult to segregate the business expenses and personal expenses of the owners. For example, maintenance expense of a car which is used by the owner for business and domestic purposes both.
(v) Based on Estimates:
The profit is based on estimation, hence cannot be relied upon. Similarly, the position of assets and liabilities does not show true and fair view of the business concern.
(vi) Highly Flexible:
This mechanism is not based on any set rules, principles and accounting standards, so it can be modified and changed as per the need and availability of time.
(vii) Suitable for very Small Business Entities:
Though the information provided by this system is inaccurate and not authentic yet this system is time and cost saving, hence adapted by those small business entities that are not bound to keep records of business transactions as per double entry system.
(viii) Mainly Personal Accounts are Maintained:
Under this system, mainly personal accounts are maintained and no record of real and personal accounts is maintained.
Explanation:
Meaning of Incomplete Records:
Accounting records not strictly based on principles of double entry system but based on incomplete records and mere memory is known as accounting from incomplete records. Single entry is a misnomer, as no such system exists for recording transaction in accounting. Actually, accounting from incomplete records is a mixed system of recording business transactions in which some transactions are recorded as per double entry system and for certain transactions only a single entry is made in the books of accounts.
It is worth mentioning that for certain transactions no recording is made in the books of accounts. Under this system, records related to cash account and personal accounts of debtors and creditors are maintained as per double entry system. Information relating to cash sales, cash purchases are recorded partially and information related to depreciation etc. are not recorded at all. In other words, we can say that accounting from incomplete records is just an attempt to record business transactions on the lines of double entry system.