Question

Profit as per accounts from incomplete records may be constructed as equivalent of _____________.

• A. Excess of assets over liabilities at the close of the period
• B. Excess of capital at the end over the capital at the beginning
• C. Excess of assets over liabilities at the commencement of the period
• D. Excess of capital at the beginning over the capital at the end

Answer 1

The correct option is B Excess of capital at the end over the capital at the beginning

Incomplete records - Accounting records, which are not strictly kept according to double entry system are known as incomplete records. Many authors describe it as single entry system. However, single entry system is a misnomer because there is no such system of maintaining accounting records. It is also not a ‘short cut’ method as an alternative to double entry system.

In this system of accounting, profit is ascertained as :

Profit = Capital at the end + Drawings - Capital in the beginning.