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Financial Accounting Notes

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Published in: Accountancy | Accounts
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Financial Accounting Notes For Class XI.

Geeta / Delhi

1 year of teaching experience

Qualification: B.Com (Aradhya institute - 2014)

Teaches: Commerce Subjects, Accountancy, B.Com Tuition, Costing, Financial Management

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  1. ACCOUNTING FROM INCOMPLETE RECORDS Single entry system: under this system, the cash book and personal a/cs of debtors and creditors are maintained ; real and nominal accounts are not, since both aspects are not recorded , the system is known as accounts from incomplete records. DEFINITION Kohler defines single entry system as ," a system of book keeping in which as a rule only records of cash and personal a/cs are maintained , it is always incomplete double entry varying with circumstances. FEATURES OF SINGLE ENTRY SYSTEM 1. 2. 3. 4. 5. 6. Suitability: no. Of transaction is less. No uniformity: Maintainance of personal a/cs : Maintainance of cash book: Dependence on original vouchers: Difficulty in preparation of fin a/cs: ADVANTAGES OF SINGLE ENTRY SYSTEM 1. 2. 3. 4. 5. Simple Less expensice Suitable for small business No need of expert knowledge Easy to ascertain p&l DISADVANTAGES OF SINGLE ENTRY SYSTEM Airthmetic accuracy No control on assets Correct p&l cannot determined Financial position of business No internal check Difficult to asceetain the value of business Incomplete and unscientific system Comparative study is difficult
  2. METHODS OF ASCERTAINING PROFIT UNDER SINGLE ENTRY SYSTEM Statement of affairs method Conversion method Statement of affairs / net worth method: It is a statement of assets and liabilities . diffrence between the two sided taken as capital. If capital at the end exceeds than the beginging of year it is taken as profit. PROFIT: CAPITAL AT THE END + DRAWINGS - ADDITIONAL CAPITAL INTRODUCED -CAPITAL IN THE BEGINING Conversion method: Under this method certain information (sales , purchase and operating expenses ) is not available form incomplete records. It means converting a/cs from single entry to double entry system.

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