Class 11 Accountancy - Chapter Accounts from Incomplete Records NCERT Solutions | Distinguish between statement of affairs
Distinguish between statement of affairs and balance sheet.
| Basic of Difference | Balance Sheet | Statement of Affairs |
|---|---|---|
| 1. Double Entry | It is prepared with the list of ledger balances drawn from the books of accounts kept on the basis of double entry. | It is not prepared with the list of ledger balances but with such information as is available from the accounting records kept on the basis of single entry. |
| 2. Arithmetical Accuracy | The tallying of balance sheet proves arithmetical accuracy of accounting books because it is prepared on the basis of a trial balance. | A statement of Affairs does not prove the arithmetical accuracy of accounting books because it is not prepared on the basis of a trial balance. |
| 3. Value of Assets and Liabilities | The values of assets and liabilities shown in a Balance Sheet are the actual values based on ledger accounts. | The values of assets and liabilities shown in the statement of Affairs are merely the estimates based on physical inspection. |
| 4. Object | It is prepared for ascertaining the financial position of a business. | It is prepared for ascertaining the capital of a business. |
| 5. Omission of an Asset or a Liability | If an asset or liability is omitted while preparing a Balance Sheet, it will be easily detected because the Balance Sheet will not tally. | If an asset or liability is omitted while preparing a statement of affairs, it cannot be easily detected. |
| 6. Reliability | A Balance Sheet is treated as more reliable because it is based on double entry principles. | It is treated as less reliable because it is based on incomplete records and estimates. |
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Explain how the following may be ascertained from incomplete records:
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(d) Closing balance of cash. - Q:-
State the meaning of incomplete records?
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Tick the correct answer :
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(a) Scientific (b) Unscientific
(c) Unsystematic (d) both (b) and (c) - Q:-
Opening capital is ascertained by preparing :
(a) Total debtors account (b) Total creditors account
(c) Cash account (d) Opening statement of affairs - Q:-
Write the correct word(s) :
1. Credit sales can be ascertained as the balancing figure in the .......... account.
2. Excess of .......... over ......... represents loss sustained during the period.
3. To ascertain the profit, closing capital is to be adjusted by deducting .......... and adding ..........
4. Incomplete records are generally used by .......... - Q:-
If opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs. 10,000, closing capital Rs. 90,000. The value of profit earned during the period will be :
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What is meant by a ‘statement of affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?
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‘Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader’? Do you agree? Explain.
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