What are the limitations of incomplete records?
What are the limitations of incomplete records?
The following are the limitations of incomplete records:
a) Trial balance cannot be prepared as the double entry system is not followed. Therefore, the accuracy of the accounts cannot be ensured.
(b) Evaluation of results of business cannot be determined properly.
(c) There will be issues in raising funds as the analysis of liquidity, solvency and profitability are not possible.
(d) There will be difficulties faced by owners while filing insurance claims for theft or fire.
(e) There will be issues while convincing the income tax authorities about the reliability of the calculated income.
Also read:
- Accounts From Incomplete Records
- Marshalling of Assets and Liabilities
- Accounting MCQs
- What Is the Balance Sheet Equation
- Balance Sheet Vs Consolidated Balance Sheet
Learn about more questions and answers on business studies and various other commerce topics from our website.
The following are the limitations of incomplete records:
a) Trial balance cannot be prepared as the double entry system is not followed. Therefore, the accuracy of the accounts cannot be ensured.
(b) Evaluation of results of business cannot be determined properly.
(c) There will be issues in raising funds as the analysis of liquidity, solvency and profitability are not possible.
(d) There will be difficulties faced by owners while filing insurance claims for theft or fire.
(e) There will be issues while convincing the income tax authorities about the reliability of the calculated income.
Also read:
- Accounts From Incomplete Records
- Marshalling of Assets and Liabilities
- Accounting MCQs
- What Is the Balance Sheet Equation
- Balance Sheet Vs Consolidated Balance Sheet
Learn about more questions and answers on business studies and various other commerce topics from our website.
