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CA Foundation · Accounting · Accounts from Incomplete Records

Which of the following is a typical feature of a business that maintains accounts from incomplete records (single entry system)?

Incomplete records typically consist of a cash book and personal accounts of debtors and creditors, while nominal and real accounts are often not kept. Because double entry is not complete, no reliable trial balance exists and profit must be found indirectly.

  1. AComplete double entry is maintained for all transactions, including personal accounts only
  2. BOnly cash book and personal accounts of debtors and creditors are usually kept, while nominal and real accounts are often ignoredCorrect
  3. CA trial balance is prepared regularly to prove arithmetical accuracy
  4. DFinal accounts are prepared directly from ledger balances without any adjustment

Explanation

Under incomplete records, traders usually keep a cash book and sometimes personal accounts of debtors and creditors, but nominal and real accounts are generally not maintained. Hence a trial balance cannot be relied on, and profit has to be ascertained indirectly. Option C is wrong because a trial balance is not feasible without full double entry.

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