Incomplete records system is unscientific, incomplete, inaccurate and unsystematic. Explain

Incomplete record system, also known as single entry system is not a standard practice like double entry system based on dual aspect concept. Double entry system is based on scientific dual aspect concept that makes it possible to scientifically locate any error arising due to emission, omission or clerical mistake. Two sides of the trial balance will not tally if there is any error in double entry system. However, there is no as such advantage in using single entry system or incomplete record system. These records are maintained by accounting novice people or small traders who are not officially required to maintain books of account.

Considering above differences with double entry system, we can observe following limitations of incomplete record system:

  1. It is an incomplete and unscientific system.
  2. Automatic check and reconciliation of accounts are not possible.
  3. Correct excess or diminution of income over expenditure in non-trading concerns and correct profit or loss in business houses cannot be ascertained.
  4. As the records of assets and liabilities are not properly maintained, correct financial position may not be known.
  5. The system is not reliable, Banks and income tax authorities etc., have no confidence in it.
  6. As both the aspects are not recorded, frauds can more easily be committed.
  7. Trading results and financial positions of different periods cannot be compared to arrive at useful results for the progress of business.

Sharing is caring!

Leave a Reply

Your email address will not be published. Required fields are marked *



Related Posts

Accounting in Tourism and Hospitality Organisations
Compare and contrast financial and management accounting practices deployed within tourism and hospitality organisations To begin with, managemen...
What are those various ratios that are likely to help the management
What are those various ratios that are likely to help the management in forming the opinion about the solvency position of the firm. Explain the...
The qualitative characteristics of financial information
In order for the financial statements to be useful to the stakeholders of a business they must embody certain qualitative characteristics. They ...
powered by RelatedPosts
%d bloggers like this: