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All questions of Chapter 9: Accounts from Incomplete Records for CA Foundation Exam
If capital in the beginning is more than at the end then it will be- a)Loss
- b)Neither profit or loss
- c)Profit
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
If capital in the beginning is more than at the end then it will be
a)
Loss
b)
Neither profit or loss
c)
Profit
d)
None of these
|
Kritika Bajaj answered |
**Answer:**
To understand why the correct answer is option 'A' (Loss), let's break down the question and the concepts involved.
**1. Understanding Capital:**
In commerce, capital refers to the total amount of money or assets invested in a business or enterprise. It represents the initial investment made by the owners or shareholders to start or expand the business.
**2. Profit and Loss:**
Profit and loss are the two key outcomes that can occur in a business. They are determined by comparing the revenue generated with the expenses incurred during a specific period.
- Profit: When the revenue earned is higher than the total expenses, a business is said to have made a profit. Profit reflects the positive financial performance of a business and is usually the desired outcome.
- Loss: On the other hand, when the expenses exceed the revenue, a business incurs a loss. Loss represents a negative financial performance and is generally considered unfavorable.
**3. The Given Scenario:**
According to the given scenario, the capital in the beginning is more than at the end. This implies that the initial investment or capital has decreased over time, indicating a reduction in the value of the assets or money invested.
**4. Interpreting the Result:**
When the capital in the beginning is greater than at the end, it suggests that the business has experienced a decrease in its overall value. This reduction can occur due to various factors, such as:
- Operating losses: If the business has incurred significant expenses or faced a decline in revenue, it may result in a decrease in capital.
- Depreciation: If the assets owned by the business have depreciated in value over time, it can contribute to a decrease in capital.
- Liabilities: If the business has accumulated debts or liabilities that exceed its assets, it can lead to a reduction in capital.
Therefore, in the given scenario, where the capital at the beginning is more than at the end, the correct answer is option 'A' (Loss). It indicates that the business has incurred a loss, resulting in a decrease in the initial investment or capital.
To understand why the correct answer is option 'A' (Loss), let's break down the question and the concepts involved.
**1. Understanding Capital:**
In commerce, capital refers to the total amount of money or assets invested in a business or enterprise. It represents the initial investment made by the owners or shareholders to start or expand the business.
**2. Profit and Loss:**
Profit and loss are the two key outcomes that can occur in a business. They are determined by comparing the revenue generated with the expenses incurred during a specific period.
- Profit: When the revenue earned is higher than the total expenses, a business is said to have made a profit. Profit reflects the positive financial performance of a business and is usually the desired outcome.
- Loss: On the other hand, when the expenses exceed the revenue, a business incurs a loss. Loss represents a negative financial performance and is generally considered unfavorable.
**3. The Given Scenario:**
According to the given scenario, the capital in the beginning is more than at the end. This implies that the initial investment or capital has decreased over time, indicating a reduction in the value of the assets or money invested.
**4. Interpreting the Result:**
When the capital in the beginning is greater than at the end, it suggests that the business has experienced a decrease in its overall value. This reduction can occur due to various factors, such as:
- Operating losses: If the business has incurred significant expenses or faced a decline in revenue, it may result in a decrease in capital.
- Depreciation: If the assets owned by the business have depreciated in value over time, it can contribute to a decrease in capital.
- Liabilities: If the business has accumulated debts or liabilities that exceed its assets, it can lead to a reduction in capital.
Therefore, in the given scenario, where the capital at the beginning is more than at the end, the correct answer is option 'A' (Loss). It indicates that the business has incurred a loss, resulting in a decrease in the initial investment or capital.
When only closing and opening capital is given and closing capital is greater than opening capital it denotes- a)Profit
- b)Profit if there is no introduction of fresh capital
- c)Loss
- d)None
Correct answer is option 'B'. Can you explain this answer?
When only closing and opening capital is given and closing capital is greater than opening capital it denotes
a)
Profit
b)
Profit if there is no introduction of fresh capital
c)
Loss
d)
None
|
Shriyanshu Keshari answered |
Yes b is right answer as new capital not come and increase in capital therefor we r in profit
Bad-debts written off always affect the:- a)Creditors
- b)Debtors
- c)Cash
- d)None
Correct answer is option 'B'. Can you explain this answer?
Bad-debts written off always affect the:
a)
Creditors
b)
Debtors
c)
Cash
d)
None
|
Darsheel Gupta answered |
Bad debts written off always affects the debtors as it covers the adjustment which was recorded in the balance sheet as the expense of bad debts and was deducted from the debtors .
Commission received in advance is to be shown in statement of affairs on- a)Cash balance
- b)Total assets
- c)Total liabilities
- d)Liabilities side
Correct answer is option 'D'. Can you explain this answer?
Commission received in advance is to be shown in statement of affairs on
a)
Cash balance
b)
Total assets
c)
Total liabilities
d)
Liabilities side
|
|
Ayushi Gupta answered |
Commission received in advance mean unearned income and it relate to next year but in statement of affair current year transaction are recorded so it is a liability
Cash in hand can be obtained by preparing- a)Statement of affairs
- b)Cash book
- c)Debtors
- d)Creditors
Correct answer is option 'B'. Can you explain this answer?
Cash in hand can be obtained by preparing
a)
Statement of affairs
b)
Cash book
c)
Debtors
d)
Creditors
|
Srestha Choudhury answered |
Explanation:
Cash in hand can be obtained by preparing the Cash Book. A Cash Book is a book of original entry in which transactions related to cash receipts and payments are recorded. It is a book of prime entry because all transactions related to cash are first recorded in it before they are posted to the ledger accounts.
The Cash Book serves the following purposes:
1. It records all cash receipts and payments.
2. It shows the cash balance at any point in time.
3. It helps to detect errors and frauds related to cash.
4. It serves as a basis for preparing the Trial Balance and the Statement of Cash Flows.
Therefore, by preparing a Cash Book, one can ascertain the amount of cash in hand at any point in time. It is an important document for any business as it helps in managing the cash flow efficiently.
Conclusion:
Hence, the correct answer is option 'B', i.e., Cash in hand can be obtained by preparing the Cash Book.
Cash in hand can be obtained by preparing the Cash Book. A Cash Book is a book of original entry in which transactions related to cash receipts and payments are recorded. It is a book of prime entry because all transactions related to cash are first recorded in it before they are posted to the ledger accounts.
The Cash Book serves the following purposes:
1. It records all cash receipts and payments.
2. It shows the cash balance at any point in time.
3. It helps to detect errors and frauds related to cash.
4. It serves as a basis for preparing the Trial Balance and the Statement of Cash Flows.
Therefore, by preparing a Cash Book, one can ascertain the amount of cash in hand at any point in time. It is an important document for any business as it helps in managing the cash flow efficiently.
Conclusion:
Hence, the correct answer is option 'B', i.e., Cash in hand can be obtained by preparing the Cash Book.
Which of the following transactions are false regarding Accounting from Incomplete records system- a)Some financial events are not recorded at all
- b)Two aspects of all transactions are recorded
- c)Original vouchers provide base for preparing the accounts
- d)Accounting Principles and Accounting Standards are not followed properly under this system.
Correct answer is option 'B'. Can you explain this answer?
Which of the following transactions are false regarding Accounting from Incomplete records system
a)
Some financial events are not recorded at all
b)
Two aspects of all transactions are recorded
c)
Original vouchers provide base for preparing the accounts
d)
Accounting Principles and Accounting Standards are not followed properly under this system.
|
Paurush Garg answered |
Utkarash b answer is absolutely incorrect because it is related to double entry systems which is used in complete records. in complete accounting there are two aspects.Hope u understand. if not then reply
A Balance sheet is prepared exclusively on the basis of ________- a)Ledger Account
- b)Nominal and Real Account
- c)Nominal and Personal Account
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
A Balance sheet is prepared exclusively on the basis of ________
a)
Ledger Account
b)
Nominal and Real Account
c)
Nominal and Personal Account
d)
None of these
|
Raj Verma answered |
A balance sheet shows various A/c's on assets and liabilities sides such as Furniture A/C, Capital A/C, Bank A/C etc. All these accounts are called as Ledger A/Cs or a Balance Sheet consists of various ledgers. Hence, a balance sheet is prepared on the basis of ledger accounts.
Credit purchase can be ascertained as the balancing figure in the ___ account.- a)Creditors
- b)Debtors
- c)Both
- d)None
Correct answer is option 'A'. Can you explain this answer?
Credit purchase can be ascertained as the balancing figure in the ___ account.
a)
Creditors
b)
Debtors
c)
Both
d)
None
|
|
Priyaa Ranjan answered |
Creditors shows the credit purchase account.
To find out the profit, closing capital is to be adjusted by _____ drawings and ___ introduction of fresh capital- a)Deducting and Deducting
- b)Adding and Adding
- c)Deducting and Adding
- d)Adding and Deducting
Correct answer is option 'D'. Can you explain this answer?
To find out the profit, closing capital is to be adjusted by _____ drawings and ___ introduction of fresh capital
a)
Deducting and Deducting
b)
Adding and Adding
c)
Deducting and Adding
d)
Adding and Deducting
|
Arjun Singhania answered |
The opening capital is the adjusted balance presented toward the start of a bookkeeping period. The opening balance is the measure of assets in an organization's record toward the start of another money related period. It is the primary section in the records, either when an organization is first beginning up its records or following a year-end.
Opening Capital = closing capital + drawings - additional capital - profit + loss
Credit sale can be obtained by preparing- a)Cash book
- b)Creditors
- c)Statement of affairs
- d)Debtors
Correct answer is option 'D'. Can you explain this answer?
Credit sale can be obtained by preparing
a)
Cash book
b)
Creditors
c)
Statement of affairs
d)
Debtors
|
Aravind Kapoor answered |
Explanation:
Credit sale refers to a transaction in which goods or services are sold on credit to the customer, meaning that the payment for the sale is deferred to a later date. In order to obtain credit sale, the company needs to prepare a Debtors statement.
Debtors Statement:
A debtors statement is a record of all the customers who owe money to the company for goods or services purchased on credit. It includes the name of the customer, the amount owed, and the due date of payment. By preparing a debtors statement, the company can keep track of all outstanding payments and follow up with customers who have not paid their bills.
Importance of Debtors Statement:
A debtors statement is an important tool for managing cash flow and ensuring that the company has enough funds to meet its financial obligations. It also helps the company to identify customers who are at risk of defaulting on their payments, allowing them to take proactive measures to recover the debt.
Conclusion:
Therefore, it can be concluded that preparing a debtors statement is essential for obtaining credit sales as it helps the company to keep track of all outstanding payments and ensure that they receive payment for goods or services sold on credit.
Credit sale refers to a transaction in which goods or services are sold on credit to the customer, meaning that the payment for the sale is deferred to a later date. In order to obtain credit sale, the company needs to prepare a Debtors statement.
Debtors Statement:
A debtors statement is a record of all the customers who owe money to the company for goods or services purchased on credit. It includes the name of the customer, the amount owed, and the due date of payment. By preparing a debtors statement, the company can keep track of all outstanding payments and follow up with customers who have not paid their bills.
Importance of Debtors Statement:
A debtors statement is an important tool for managing cash flow and ensuring that the company has enough funds to meet its financial obligations. It also helps the company to identify customers who are at risk of defaulting on their payments, allowing them to take proactive measures to recover the debt.
Conclusion:
Therefore, it can be concluded that preparing a debtors statement is essential for obtaining credit sales as it helps the company to keep track of all outstanding payments and ensure that they receive payment for goods or services sold on credit.
A limited company cannot maintain its accounts under Single entry system because- a)Follow accrual basis of accounts
- b)Legal restrictions
- c)Both
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
A limited company cannot maintain its accounts under Single entry system because
a)
Follow accrual basis of accounts
b)
Legal restrictions
c)
Both
d)
None of these
|
|
Arjun Singhania answered |
c) Both. Limited companies are required to follow the accrual basis of accounting, which means that they need to record all revenues and expenses when they are earned or incurred, regardless of when payment is received or made. This is in contrast to the cash basis of accounting, which records revenues when payment is received and expenses when payment is made. The accrual basis of accounting requires the use of double-entry accounting, which is not possible under the single entry system. Additionally, there may be legal restrictions on the use of the single entry system for limited companies in some countries.
A statement of assets and liabilities prepared under the single entry system is called- a)Balance sheet
- b)Financial statement
- c)Statement of affairs
- d)Cash book
Correct answer is option 'C'. Can you explain this answer?
A statement of assets and liabilities prepared under the single entry system is called
a)
Balance sheet
b)
Financial statement
c)
Statement of affairs
d)
Cash book
|
Ishani Yadav answered |
Statement of Affairs under Single-Entry System
The statement of assets and liabilities prepared under the single-entry system is called the statement of affairs. It is a document that shows the financial position of an individual or a business at a particular date. The statement of affairs is prepared by listing the assets and liabilities of the business and calculating the net worth of the business.
Assets
Assets are resources that a business owns and can be used to generate income. They are listed in the statement of affairs at their current market value. Assets can be classified into different categories, such as:
- Fixed assets: These are assets that are expected to provide benefits to the business for more than one year, such as land, buildings, machinery, and equipment.
- Current assets: These are assets that are expected to be converted into cash within one year, such as inventory, accounts receivable, and cash in hand or bank.
Liabilities
Liabilities are obligations that a business owes to others and must be paid off. They are listed in the statement of affairs at their current market value. Liabilities can be classified into different categories, such as:
- Long-term liabilities: These are liabilities that are payable after one year, such as loans and mortgages.
- Current liabilities: These are liabilities that are payable within one year, such as accounts payable, taxes payable, and bank overdrafts.
Net Worth
The net worth of a business is calculated by subtracting the total liabilities from the total assets. It represents the total value of the business that belongs to the owner(s) after all the liabilities have been paid off. The net worth can be positive or negative, depending on whether the assets are greater or less than the liabilities.
Conclusion
In summary, the statement of affairs is a document that shows the financial position of a business under the single-entry system. It lists the assets and liabilities of the business and calculates the net worth. It is an important tool for business owners to monitor their financial health and make informed decisions.
The statement of assets and liabilities prepared under the single-entry system is called the statement of affairs. It is a document that shows the financial position of an individual or a business at a particular date. The statement of affairs is prepared by listing the assets and liabilities of the business and calculating the net worth of the business.
Assets
Assets are resources that a business owns and can be used to generate income. They are listed in the statement of affairs at their current market value. Assets can be classified into different categories, such as:
- Fixed assets: These are assets that are expected to provide benefits to the business for more than one year, such as land, buildings, machinery, and equipment.
- Current assets: These are assets that are expected to be converted into cash within one year, such as inventory, accounts receivable, and cash in hand or bank.
Liabilities
Liabilities are obligations that a business owes to others and must be paid off. They are listed in the statement of affairs at their current market value. Liabilities can be classified into different categories, such as:
- Long-term liabilities: These are liabilities that are payable after one year, such as loans and mortgages.
- Current liabilities: These are liabilities that are payable within one year, such as accounts payable, taxes payable, and bank overdrafts.
Net Worth
The net worth of a business is calculated by subtracting the total liabilities from the total assets. It represents the total value of the business that belongs to the owner(s) after all the liabilities have been paid off. The net worth can be positive or negative, depending on whether the assets are greater or less than the liabilities.
Conclusion
In summary, the statement of affairs is a document that shows the financial position of a business under the single-entry system. It lists the assets and liabilities of the business and calculates the net worth. It is an important tool for business owners to monitor their financial health and make informed decisions.
Books according to Incomplete records system can be maintained only by those small entities in the form of- a)Company and partnership
- b)Sole proprietor and partnership
- c)Sole proprietor and company
- d)None
Correct answer is option 'B'. Can you explain this answer?
Books according to Incomplete records system can be maintained only by those small entities in the form of
a)
Company and partnership
b)
Sole proprietor and partnership
c)
Sole proprietor and company
d)
None
|
|
Priyanshu Tiwari answered |
Books according to this system can be maintained only by those small entities in the form of Sole Proprietorship or Partnership firms that are not bound to keep records of business transactions as per double entry system
Net worth of an organization means the excess of its total assets over total:- a)Revenue
- b)Liabilities
- c)Expenses
- d)Income
Correct answer is option 'B'. Can you explain this answer?
Net worth of an organization means the excess of its total assets over total:
a)
Revenue
b)
Liabilities
c)
Expenses
d)
Income
|
Naina Menon answered |
Net worth of an organization is a crucial financial indicator that represents the amount of equity that the organization holds. It is calculated by subtracting the total liabilities from the total assets of the organization. In other words, net worth is the residual interest of the owners in the assets of the organization after the liabilities have been paid off.
Explanation:
Total Assets: The total assets of an organization include all the resources that it owns. These may include cash, inventory, property, plant, and equipment, investments, and accounts receivable. The value of these assets is usually determined by their market value or their book value.
Total Liabilities: The total liabilities of an organization include all the obligations that it owes to others. These may include loans, accounts payable, taxes, and other debts. The value of these liabilities is usually determined by the amount that the organization owes to its creditors.
Excess of Total Assets over Total Liabilities: The excess of total assets over total liabilities is the net worth of the organization. This represents the value of the ownership interest that the owners of the organization have in the assets of the organization. Net worth is an important financial indicator that helps to assess the financial health of an organization.
Conclusion:
In conclusion, the net worth of an organization is calculated by subtracting the total liabilities from the total assets. The resulting figure represents the residual interest of the owners in the assets of the organization. Net worth is an important financial indicator that helps to assess the financial health of an organization and is used by investors and creditors to make investment and lending decisions.
Explanation:
Total Assets: The total assets of an organization include all the resources that it owns. These may include cash, inventory, property, plant, and equipment, investments, and accounts receivable. The value of these assets is usually determined by their market value or their book value.
Total Liabilities: The total liabilities of an organization include all the obligations that it owes to others. These may include loans, accounts payable, taxes, and other debts. The value of these liabilities is usually determined by the amount that the organization owes to its creditors.
Excess of Total Assets over Total Liabilities: The excess of total assets over total liabilities is the net worth of the organization. This represents the value of the ownership interest that the owners of the organization have in the assets of the organization. Net worth is an important financial indicator that helps to assess the financial health of an organization.
Conclusion:
In conclusion, the net worth of an organization is calculated by subtracting the total liabilities from the total assets. The resulting figure represents the residual interest of the owners in the assets of the organization. Net worth is an important financial indicator that helps to assess the financial health of an organization and is used by investors and creditors to make investment and lending decisions.
Following are the Limitations of Incomplete Records except- a)incomplete method of maintaining the ac counting records
- b)Under this system no real and nominal accounts are maintained
- c)it is not possible to prepare a balance sheet showing the true financial position of the business
- d)his method is highly flexible because it can be adjusted according to the need of the organization
Correct answer is option 'D'. Can you explain this answer?
Following are the Limitations of Incomplete Records except
a)
incomplete method of maintaining the ac counting records
b)
Under this system no real and nominal accounts are maintained
c)
it is not possible to prepare a balance sheet showing the true financial position of the business
d)
his method is highly flexible because it can be adjusted according to the need of the organization
|
Vanshika Pruthi answered |
Explain plzz
A statement of affairs shows only the _____ financial position of the business- a)Fair
- b)Accurate
- c)Estimated
- d)All of these
Correct answer is option 'C'. Can you explain this answer?
A statement of affairs shows only the _____ financial position of the business
a)
Fair
b)
Accurate
c)
Estimated
d)
All of these
|
Liladhar Advirkar Advirk answered |
A statement of affairs is used in single entry system which is somewhat similar to a balance sheet but it lacks accuracy as it ignores the dual effect of each transactions.Thus , it is said that it only shows the estimated financial affairs of the business .
Which of the following is not a feature of system of single entry system- a)No uniformity
- b)Maintenance of personal accounts
- c)Suitable of limited companies
- d)Maintenance of cash book
Correct answer is option 'C'. Can you explain this answer?
Which of the following is not a feature of system of single entry system
a)
No uniformity
b)
Maintenance of personal accounts
c)
Suitable of limited companies
d)
Maintenance of cash book
|
Pallavi Chopra answered |
Single Entry System and its Features
Single Entry System is a bookkeeping system that is used to record financial transactions in a simple way. It is usually used by small businesses or individuals who do not require a more complex system. Here are the features of the Single Entry System:
1. No Uniformity
The single entry system does not follow any set of rules or principles, making it an unorganized system. It is not a standardized accounting system, and the financial statements produced by this system may not be accurate.
2. Maintenance of Personal Accounts
In single entry system, personal accounts are maintained separately. These accounts include accounts of debtors, creditors, owners, and expenses. It records only the cash and credit transactions, which are entered in the cash book.
3. Maintenance of Cash Book
The cash book is the main record of the single entry system. It records all the cash and credit transactions of a business. Cash book is divided into two sections - cash column and credit column, where cash transactions are recorded in the cash column and credit transactions in the credit column.
4. Suitable for Small Businesses
Single entry system is suitable for small businesses where the volume of transactions is low. It is mostly used by small traders, shopkeepers, and professionals who have a limited number of transactions.
5. Limitations
As mentioned above, single entry system is not a standardized accounting system, and therefore, it has many limitations. It cannot provide accurate financial statements, and it does not provide a complete view of a business's financial position.
Conclusion
In conclusion, the single entry system is a simple and basic bookkeeping system that is suitable for small businesses with few transactions. It does not follow any set of rules or principles and does not provide accurate financial statements. It maintains personal accounts separately and the main record is cash book.
Single Entry System is a bookkeeping system that is used to record financial transactions in a simple way. It is usually used by small businesses or individuals who do not require a more complex system. Here are the features of the Single Entry System:
1. No Uniformity
The single entry system does not follow any set of rules or principles, making it an unorganized system. It is not a standardized accounting system, and the financial statements produced by this system may not be accurate.
2. Maintenance of Personal Accounts
In single entry system, personal accounts are maintained separately. These accounts include accounts of debtors, creditors, owners, and expenses. It records only the cash and credit transactions, which are entered in the cash book.
3. Maintenance of Cash Book
The cash book is the main record of the single entry system. It records all the cash and credit transactions of a business. Cash book is divided into two sections - cash column and credit column, where cash transactions are recorded in the cash column and credit transactions in the credit column.
4. Suitable for Small Businesses
Single entry system is suitable for small businesses where the volume of transactions is low. It is mostly used by small traders, shopkeepers, and professionals who have a limited number of transactions.
5. Limitations
As mentioned above, single entry system is not a standardized accounting system, and therefore, it has many limitations. It cannot provide accurate financial statements, and it does not provide a complete view of a business's financial position.
Conclusion
In conclusion, the single entry system is a simple and basic bookkeeping system that is suitable for small businesses with few transactions. It does not follow any set of rules or principles and does not provide accurate financial statements. It maintains personal accounts separately and the main record is cash book.
In single entry system, it is not possible to prepare:- a)Account sales
- b)Balance sheet
- c) Trial balance
- d)Receipts and payments A/c
Correct answer is option 'C'. Can you explain this answer?
In single entry system, it is not possible to prepare:
a)
Account sales
b)
Balance sheet
c)
Trial balance
d)
Receipts and payments A/c
|
Rajat Patel answered |
Single entry system of book-keeping is not a system at all. It means recording transactions not according to well defined rules but according to mere convenience. Under the Double Entry System a transaction must be recorded with both the aspects. If there is debit, there must be a credit and vice-versa. It is not under the single entry syslem. Debit and credit may be completed in transactions, while no record at all may be there in respect of a number of transactions. Most transactions are recorded only once without completed double entry. It is all a matter of convenience. Accounts are not maintained. While there is no hard and fast rule; usually only the cash account, bank (sometimes the pass book is treated as sufficient for this purpose) and personal account (that is, account of customers and creditors) are kept. Generally, there will be no accounts to show purchases, sales, assets, incomes and losses and expenses. There can be no trial balance.
How statement of affairs is differ from balance sheet- a)As it is maintained under double entry system
- b)Based on incomplete records and estimates
- c)Does not prove the arithmetical accuracy
- d)As it is prepared to ascertain capital amount at a certain point of time
Correct answer is option 'A'. Can you explain this answer?
How statement of affairs is differ from balance sheet
a)
As it is maintained under double entry system
b)
Based on incomplete records and estimates
c)
Does not prove the arithmetical accuracy
d)
As it is prepared to ascertain capital amount at a certain point of time
|
Mehakbir Singh answered |
| BASIS FOR COMPARISON | STATEMENT OF AFFAIRS | BALANCE SHEET |
|---|---|---|
| Meaning | Statement of Affairs is a statement showing assets, liabilities and capital of the entity prepared on the basis of a single entry system of bookkeeping. | A Balance Sheet is a statement showing assets, liabilities and equity of the company prepared on the basis of the double entry system of bookkeeping. |
| Capital | Nothing more than a balancing figure. | Derived from ledger accounts and so total assets are equal to total liabilities. |
| Part of Financial Statement | No | Yes |
| Objective | To find out the opening or closing capital. | To show the company's financial position. |
| Estimation of Values | Yes | No |
| Accuracy | Very less | More |
| Compulsion of Preparation | Yes | No |
| Format | Not specified | Specified |
The opening capital is ascertained by preparing- a)Opening statement of affairs
- b)Creditors
- c)Debtors
- d)Cash book
Correct answer is option 'A'. Can you explain this answer?
The opening capital is ascertained by preparing
a)
Opening statement of affairs
b)
Creditors
c)
Debtors
d)
Cash book
|
|
Priyanshu Tiwari answered |
We prepare the Statement of Affairs at the beginning of the year to ascertain the opening capital and at the end of the year to ascertain the closing capital. However, the items of assets and liabilities are ascertained from vouchers, physical count and other relevant documents.
This system of accounting is not reliable because- a)trading and profit and loss account cannot be prepared
- b)balance sheet cannot be prepared
- c)trial balance cannot be prepared
- d)all the above
Correct answer is option 'D'. Can you explain this answer?
This system of accounting is not reliable because
a)
trading and profit and loss account cannot be prepared
b)
balance sheet cannot be prepared
c)
trial balance cannot be prepared
d)
all the above
|
Kunal Pillai answered |
**Explanation:**
The given statement implies that the system of accounting being referred to is not reliable. Let's examine each option to understand why the system is considered unreliable.
a) **Trading and profit and loss account cannot be prepared:**
The trading and profit and loss account is an important financial statement that summarizes the sales, expenses, and profit or loss of a business during a specific period. It provides valuable insights into the performance and profitability of the business. If the system of accounting cannot generate a trading and profit and loss account, it indicates a significant flaw in the system's ability to accurately track and record financial transactions. Without this statement, it becomes difficult to assess the profitability of the business and make informed decisions.
b) **Balance sheet cannot be prepared:**
The balance sheet is a financial statement that presents the financial position of a business at a specific point in time. It provides a snapshot of the business's assets, liabilities, and owner's equity. The balance sheet is crucial for understanding the financial health and stability of a business. If the system of accounting cannot generate a balance sheet, it indicates a fundamental flaw in the system's ability to accurately record and report financial transactions. Without a balance sheet, it becomes challenging to assess the overall financial position, leverage, and liquidity of the business.
c) **Trial balance cannot be prepared:**
The trial balance is a statement that lists all the general ledger accounts and their respective debit or credit balances. It is prepared to ensure the equality of debits and credits and to identify any errors or discrepancies in the accounting records. The trial balance is an essential step in the accounting process as it forms the basis for preparing the financial statements. If the system of accounting cannot generate a trial balance, it indicates a significant deficiency in the system's ability to maintain accurate and balanced accounting records. Without a trial balance, it becomes difficult to identify and rectify errors, leading to unreliable financial statements.
**In Conclusion:**
The given options a), b), and c) collectively indicate that the system of accounting lacks the necessary functionality to prepare essential financial statements like trading and profit and loss account, balance sheet, and trial balance. These statements are vital for assessing the financial performance, position, and accuracy of the accounting records. Therefore, the system of accounting is considered unreliable due to its inability to generate these critical financial statements.
The given statement implies that the system of accounting being referred to is not reliable. Let's examine each option to understand why the system is considered unreliable.
a) **Trading and profit and loss account cannot be prepared:**
The trading and profit and loss account is an important financial statement that summarizes the sales, expenses, and profit or loss of a business during a specific period. It provides valuable insights into the performance and profitability of the business. If the system of accounting cannot generate a trading and profit and loss account, it indicates a significant flaw in the system's ability to accurately track and record financial transactions. Without this statement, it becomes difficult to assess the profitability of the business and make informed decisions.
b) **Balance sheet cannot be prepared:**
The balance sheet is a financial statement that presents the financial position of a business at a specific point in time. It provides a snapshot of the business's assets, liabilities, and owner's equity. The balance sheet is crucial for understanding the financial health and stability of a business. If the system of accounting cannot generate a balance sheet, it indicates a fundamental flaw in the system's ability to accurately record and report financial transactions. Without a balance sheet, it becomes challenging to assess the overall financial position, leverage, and liquidity of the business.
c) **Trial balance cannot be prepared:**
The trial balance is a statement that lists all the general ledger accounts and their respective debit or credit balances. It is prepared to ensure the equality of debits and credits and to identify any errors or discrepancies in the accounting records. The trial balance is an essential step in the accounting process as it forms the basis for preparing the financial statements. If the system of accounting cannot generate a trial balance, it indicates a significant deficiency in the system's ability to maintain accurate and balanced accounting records. Without a trial balance, it becomes difficult to identify and rectify errors, leading to unreliable financial statements.
**In Conclusion:**
The given options a), b), and c) collectively indicate that the system of accounting lacks the necessary functionality to prepare essential financial statements like trading and profit and loss account, balance sheet, and trial balance. These statements are vital for assessing the financial performance, position, and accuracy of the accounting records. Therefore, the system of accounting is considered unreliable due to its inability to generate these critical financial statements.
How DOUBLE ENTRY SYSTEM is differ from INCOMPLETE RECORDS- a)Only personal account is maintained in it
- b)Arithmetic accuracy can not be checked in it
- c)Both aspects of every transaction are recorded
- d)As True and fair financial position can not be maintained
Correct answer is option 'C'. Can you explain this answer?
How DOUBLE ENTRY SYSTEM is differ from INCOMPLETE RECORDS
a)
Only personal account is maintained in it
b)
Arithmetic accuracy can not be checked in it
c)
Both aspects of every transaction are recorded
d)
As True and fair financial position can not be maintained
|
BT Educators answered |
Double Entry System vs Incomplete Records
The double-entry system and incomplete records are two different methods of accounting that have distinct characteristics. Here is a detailed explanation of how they differ from each other:
Double Entry System:
1. Recording: In the double-entry system, both aspects of every transaction are recorded. This means that every transaction has a debit entry and a corresponding credit entry.
2. Completeness: It ensures the completeness of financial records as every transaction is recorded in detail.
3. Accuracy: The system allows for the verification of the arithmetic accuracy of the accounts. The debit and credit entries should always balance, ensuring accuracy in recording transactions.
4. Financial Position: It provides a true and fair view of the financial position of the business by maintaining all relevant accounts, including personal, real, and nominal accounts.
Incomplete Records:
1. Recording: In incomplete records, only personal accounts are maintained. Personal accounts include accounts of individuals, creditors, and debtors.
2. Completeness: It lacks completeness as other types of accounts, such as real and nominal accounts, are not recorded.
3. Accuracy: The system does not allow for the verification of the arithmetic accuracy of the accounts as only partial information is recorded.
4. Financial Position: It is difficult to determine the true and fair financial position of the business as important aspects of the accounts, such as assets, liabilities, and expenses, may not be recorded.
In conclusion, the main difference between the double-entry system and incomplete records lies in the completeness, accuracy, and maintenance of various types of accounts. The double-entry system ensures the recording of both aspects of every transaction, maintains completeness and accuracy, and provides a true and fair financial position. On the other hand, incomplete records only maintain personal accounts, lack completeness and accuracy, and make it difficult to determine the true financial position.
The double-entry system and incomplete records are two different methods of accounting that have distinct characteristics. Here is a detailed explanation of how they differ from each other:
Double Entry System:
1. Recording: In the double-entry system, both aspects of every transaction are recorded. This means that every transaction has a debit entry and a corresponding credit entry.
2. Completeness: It ensures the completeness of financial records as every transaction is recorded in detail.
3. Accuracy: The system allows for the verification of the arithmetic accuracy of the accounts. The debit and credit entries should always balance, ensuring accuracy in recording transactions.
4. Financial Position: It provides a true and fair view of the financial position of the business by maintaining all relevant accounts, including personal, real, and nominal accounts.
Incomplete Records:
1. Recording: In incomplete records, only personal accounts are maintained. Personal accounts include accounts of individuals, creditors, and debtors.
2. Completeness: It lacks completeness as other types of accounts, such as real and nominal accounts, are not recorded.
3. Accuracy: The system does not allow for the verification of the arithmetic accuracy of the accounts as only partial information is recorded.
4. Financial Position: It is difficult to determine the true and fair financial position of the business as important aspects of the accounts, such as assets, liabilities, and expenses, may not be recorded.
In conclusion, the main difference between the double-entry system and incomplete records lies in the completeness, accuracy, and maintenance of various types of accounts. The double-entry system ensures the recording of both aspects of every transaction, maintains completeness and accuracy, and provides a true and fair financial position. On the other hand, incomplete records only maintain personal accounts, lack completeness and accuracy, and make it difficult to determine the true financial position.
Profit is calculated by the formula- a)Capital at the end - Drawing – Fresh capital – opening capital
- b)Opening Capital + Drawing + Fresh Capital- Ending capital
- c)Capital at the end + Drawing – Fresh capital- Opening capital
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
Profit is calculated by the formula
a)
Capital at the end - Drawing – Fresh capital – opening capital
b)
Opening Capital + Drawing + Fresh Capital- Ending capital
c)
Capital at the end + Drawing – Fresh capital- Opening capital
d)
None of these
|
Jatin Sharma answered |
B)Revenue - Expenses
c)Sales - Cost of Goods Sold
d)Total Income - Total Expenses
c)Sales - Cost of Goods Sold
d)Total Income - Total Expenses
Mr.Vinod a small shop-keeper is using single entry system because____- a)It is not costly
- b)Credit transactions are many
- c)Cash transactions and credit transactions are more
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
Mr.Vinod a small shop-keeper is using single entry system because____
a)
It is not costly
b)
Credit transactions are many
c)
Cash transactions and credit transactions are more
d)
None of these
|
Anu Basu answered |
Cost-effective:
Single entry system is preferred by small shop-keepers like Mr. Vinod because it is cost-effective. Unlike double entry system which requires more resources and expertise to maintain, single entry system is simpler and less expensive to implement and maintain. This is important for small businesses with limited financial resources.
Less complexity:
Single entry system involves recording transactions only once, unlike double entry system which requires recording transactions in multiple accounts. This reduces the complexity of record-keeping for small shop-keepers who may not have the time or expertise to manage a more intricate accounting system.
Focus on cash transactions:
Small shop-keepers like Mr. Vinod may primarily deal with cash transactions rather than credit transactions. Single entry system is well-suited for businesses with a high volume of cash transactions and fewer credit transactions. This system allows them to easily track their cash flow and monitor their financial performance.
Limited transactions:
Since single entry system is suitable for businesses with a limited number of transactions, small shop-keepers who have a relatively small-scale operation find it sufficient for their accounting needs. This system is easier to understand and implement for businesses with a lower volume of transactions.
In conclusion, Mr. Vinod's choice of using single entry system is driven by its cost-effectiveness, simplicity, focus on cash transactions, and suitability for businesses with limited transactions.
Single entry system is preferred by small shop-keepers like Mr. Vinod because it is cost-effective. Unlike double entry system which requires more resources and expertise to maintain, single entry system is simpler and less expensive to implement and maintain. This is important for small businesses with limited financial resources.
Less complexity:
Single entry system involves recording transactions only once, unlike double entry system which requires recording transactions in multiple accounts. This reduces the complexity of record-keeping for small shop-keepers who may not have the time or expertise to manage a more intricate accounting system.
Focus on cash transactions:
Small shop-keepers like Mr. Vinod may primarily deal with cash transactions rather than credit transactions. Single entry system is well-suited for businesses with a high volume of cash transactions and fewer credit transactions. This system allows them to easily track their cash flow and monitor their financial performance.
Limited transactions:
Since single entry system is suitable for businesses with a limited number of transactions, small shop-keepers who have a relatively small-scale operation find it sufficient for their accounting needs. This system is easier to understand and implement for businesses with a lower volume of transactions.
In conclusion, Mr. Vinod's choice of using single entry system is driven by its cost-effectiveness, simplicity, focus on cash transactions, and suitability for businesses with limited transactions.
Chapter doubts & questions for Chapter 9: Accounts from Incomplete Records - Accounting for CA Foundation 2025 is part of CA Foundation exam preparation. The chapters have been prepared according to the CA Foundation exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for CA Foundation 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
Chapter doubts & questions of Chapter 9: Accounts from Incomplete Records - Accounting for CA Foundation in English & Hindi are available as part of CA Foundation exam.
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