Dr                                  Total Creditors account                           Cr

Particulars	Rs.	Particulars	Rs
To Cash (Bills paid)	30,000	By Balance b/d	25,000
To Balance c/d	20,000	By Sundry creditors	25,000
		(Bills accepted - balancing figure)
	50,000		50,000

Dr                         Total Creditors account                           Cr

Particulars	Rs.	Particulars	Rs
To Cash paid	1,20,000	By Balance b/d	30,000
To Purchases returns	15,000	By Purchases	1,55,000
To Bills payable	25,000	(credit balancing figure)
(Bills accepted)
To Balance c/d	25,000
	1,85,000		1,85,000

Total purchases = Cash purchases + Credit purchases
=Rs.2,25,000 + Rs.1,55,000
=Rs.3,80,000

Dr                          Bills receivable account                 Cr

Particulars	Rs.	Particulars	Rs
To Balance b/d	60,000	By Cash A/c	1,60,000
To Debtors A/c	2,05,000	By Debtors	15,000
(Bills received during the year - balancing figure)		(Bills receivable dishonored)
		By Balance c/d	90,000
	2,65,000		2,65,000

Dr                         Total Debtors account                     Cr

Particulars	Rs.	Particulars	Rs
To Balance b/d	2,50,000	By Cash	7,25,000
To Bills receivable	15,000	By Returns inward	50,000
(dishonored)		By Bills receivable	2,05,000
To Credit sales	9,85,000	(bills received)
		By Bad debts	30,000
		By Balance c/d	2,40,000
	10,10,000		10,10,000

 Total sales = Cash sales + Credit sales
=Rs.3,15,000 + Rs.9,85,000
=Rs.13,00,000

Dr                      Total Debtors account                Cr

Particulars	Rs.	Particulars	Rs
To Balance b/d	1,30,000	By Cash	4,20,000
To Credit sales	5,40,000	By Sales return	35,000
(Balancing figure)		By Bad debits	15,000
		By Balance c/d	2,00,000
	6,70,000		6,70,000

Total sales =Cash sales + Credit sales
=4,60,000 + 5,40,000
=Rs.10,00,000

Statement of affairs of Subha as on 31.03.2019

Liabilities	Rs.	Assets	Rs.
Creditors	90,000	Stock in trade	1,60,000
Bills payable	2,40,000	Cash in hand	60,000
Bank overdraft	50,000	Debtors	1,80,000
Capital (Balancing figure)	4,20,000	Bills receiveble	70,000
		Computer	30,000
		Machinery	3,00,000
	8,00,000		8,00,000

Statement of profit or loss for the year ending
31^st March 2019

Particulars	Rs.
Closing capital as on 31.03.2019	4,20,000
Add: Drawings during the year	30,000
	4,50,000
Less: Additional capital introduced during the year	40,000
Adjusted closing capital	4,10,000
Less: Opening capital as on 01.04.2018	1,20,000
Profit made during the year ending 31.03.2019	2,90,000

In the books of Thomas Statement of affairs as on
31^st March 2019

Liabilities	Rs.	Assets	Rs.
Sundry creditors	6,00,000	Furniture	80,000
Bills payable	1,20,000	Land and building	3,00,000
capital (Balancing figure)	2,80,000	Sundry debtors	3,20,000
		Cash in hand	20,000
		Bills receivable	60,000
		Stock	2,20,000
	10,00,000		10,00,000

Statement of profit or loss for the year ending 31^st March 2019 Particulars Rs. Closing capital as on 31^st March 2019 50,000 Add : Drawing during the year 5,000   55,000   7,000 Less: Additional capital introduced during the year 48,000   40,000 Adjusted closing capital   Less: Opening capital as on 1^st January 2018   Profit for the year 8,000

Statement of profit or loss for the year ending
31^st March 2018

Particulars	Rs.
Closing capital	1,45,000
Add : Drawings	30,000
	1,75,000
Less: Additional capital during the year	15,000
Adjusted closing capital	1,60,000
Less: Opening capital as on 1st January 2018	1,00,000
Profit for the year	60,000

Statement of profit or loss for the year ending
31^st March 2018

Particulars	Rs.
Closing capital as on (31.03.2018)	80,000
Add : Drawings during the year	15,000
	95,000
Less: Additional capital introduced during the year	30,000
Adjusted closing capital	65,000
Less: Opening capital as on 01.04.2017 (B/F)	90,000
Loss for the year ending 31.03.2018	25,000

Total sales are calculated by adding cash and credit sales. Cash sales are given in cash book. For ascertaining the amount of credit sales, the total debtors account should be prepared. The specimen of total debtors account is given below.

Dr                           Ascertainment of credit sale                     Cr

Particulars	Rs.	Particulars	Rs.
To Balace bid (Op. Bal.)	xxx	By Cash A/c (Received)	xxx
To Sles A/c (Credit sales)	xxx	By Bank (Cheques Received)	xxx
To Bank A/c (Cheque dishonoured)	xxx	By Discount allowed	xxx
To Bills receivable (Bills dishonoured)	xxx	By Sales return A/c	xxx
		By Bad debts A/c	xxx
		By Bills receivable A/c
		(Bills received)	xxx
		By Balance c/d	xxx
	xxxx	Closing balance	xxx

Following are the steps to be followed under the statement of affairs method to find out the profit or loss.
(1) Ascertain the opening capital by preparing a statement of affairs at the beginning of the year by taking the opening balances of assets and liabilities.
(2) Ascertain the closing capital by preparing a statement of affairs at the end of the accounting period after making all adjustments such as depreciation, bad debts, outstanding and prepaid expenses, outstanding income, interest on capital, interest on drawings, etc.
(3) Add the amount of drawings (both in cash and/in kind) to the closing capital.
(4) Deduct the amount of additional capital introduced, to get adjusted closing capital.
(5) Ascertain profit or loss by subtracting opening capital from the adjusted closing capital.
a) If adjusted closing capital is more than the opening capital, it denotes profit
b) If adjusted closing capital is lesser than the opening capital, it denotes loss Following format is used to find out the profit or loss:

Particulars	Rs.
Capital at the end of the year	xxxx
Add: Drawings during the year	xxxx
	xxxx
Less: Additional capital introduced during the year	xxxx
Adjusted closing capital	xxxx
Less: Opening Capital	xxxx
Profit or loss for the year	xxxx

Limitations of incomplete records: 
1) Lack of proper maintenance of records:
It is an unscientific and unsystematic way of maintaining records. Real and nominal account are not maintained properly.
2) Difficulty in preparing trial balance:
As account are not maintained for all items. The accounting record are incomplete. Hence, it is difficult to prepare trial balance to check the arithmetical accuracy of account.
3) Difficulty in ascertaining true profitability of the business:
Profit is found out based on available information and estimate. Hence, it is difficult to prepare ascertain true profit as the trading and profit and loss account cannot be prepared with accuracy.
4) Difficulty in ascertaining financial position:
In general, only the estimated values of asset and liabilities are available from incomplete records. Hence, it is difficult to ascertain true and fair view of state of affairs or financial position as on a particular date.
5) Errors and frauds Cannot be detected easily:
As only partial records are available. It may not be possible to have internal check in maintaining account to defect errors and Frauds.
6) Unacceptable to government and other authorities:
As accounts maintained are incomplete these may not comply with the legal requirement Hence government tax authorities and other. Legal authorities do not accept account prepared from incomplete rewards.

1) Nature:
It is an inscientific and insystematic way of recording transaction. Accounting principle and accounting standards are not followed properly.
2) Types of account maintained:
In general only cash and personal account maintained fully. Real account and nominal account are not maintained properly some transaction are correctly omitted.
3) Lack of uniformity:
There is no uniformity in recording the transaction among different Organisation. Different Organisation record their transaction according to their needs and conveniences.
4) Financial Statement may not represents true and fair view:
Due to the incomplete information and inaccurate record of account profit or loss calculated from these records cannot be realised upon. It may not represent true predictability. Assets and liabilities may not represent a true and fair view of financial position.
5) Suitability:
Only the business concerns which have no legal obligation to maintain books of account under double entry System may maintain incomplete record. Hence it may be maintained by small fixed sole traders and partnership items.
6) Mixing up of personal and business transactions:
Generally personal transactions of the owners, are mixed up with the business transaction. For example purchases of goods for own use may be mixed up along with business purchases.

Dr. Bills payable account Cr.

Particulars	Rs	Particulars	Rs
To Cash A/c (bills paid)	1,00,000	By Balance b/d	60,000
To Balance c/d	80,000	By Sundry creditors A/c
		(Bills accepted - balancing figure)	1,20,000
	1,80,000		1,80,000

Dr. Total creditors account  Cr.

Particulars	Rs.	Particulars	Rs.
To Cash A/c (paid)	3,70,000	By Balance b/d	75,000
To Purchases return A/c	15,000	By Purchases A/c (credit)	4,80,000
To Bills payable A/c	1,20,000	(balancing figure)
(bills accepted)
To Balance c/d	50,000
	5,55,000		5,55,000

Total purchases = Cash purchases + Credit purchases
= Rs. 3,20,000 + Rs. 4,80,000 = Rs. 8,00,000

Dr. Bills receivable account Cr.

Particulars	Rs.	Particulars	Rs
To Balance b/d	40,000	By Cash A/c	90,000
To Debtors A/c*	90,000	By Debtors A/c	10,000
(Bills received during the year – balancing figure)		(Bills receivable dishonoured)
		By Balance c/d	30,000
	1,30,000		1,30,000

Dr. Total debtors account Cr

Particulars	Rs	Particulars	Rs
To Balance b/d	1,50,000	By Cash A/c	3,90,000
To Bills receivable A/c (dishonoured)	10,000	By Sales returns A/c	40,000
To Sales A/c (credit)	4,90,000	By Bills receivable A/c*	90,000
		By Balance c/d	1,30,000
	6,50,000		6,50,000

Total Sales = Cash Sales + Credit Sales = Rs. 2,00,000 + Rs. 4,90,000 = Rs. 6,90,000.
(iii) Format of total creditors account

Dr. Total creditors account Cr.

Particulars	Rs	Particulars	Rs
To Cash A/c (paid)	xxx	By Balance b/d	xxx
To Bank A/c (cheques paid)	xxx	(opening balance)
To Bills payable A/c		By Purchases A/c	xxx
(bills accepted)	xxx	(credit purchases)
To Discount received A/c	xxx	By Bank A/c	xxx
To Purchase returns A/c	xxx	(cheques dishonoured)
To Balance c/d	xxx	By Bills payable A/c	xxx
(closing balance)		(dishonoured )
	xxx		xxx

Dr                         Total debtors account                       Cr

Particulars	Rs	Particulars	Rs
To Balance b/d	50,000	By Cash A/c	1,50,000
To Sales A/c (credit)	1,90,000	By Returns inward A/c	15,000
(balancing figure)		By Bad debts A/c	5,000
		By Balance c/d	70,000
	2,40,000		2,40,000

Total Sales = Cash Sales + Credit Sales
= Rs.1,40,000 + Rs.1,90,000
= Rs. 3,30,000
(ii) Format of bills receivable account

Dr. Bills receivable account Cr.

Particulars	Rs.	Particulars	Rs.
To Balance b/d	xxx	By Cash / Bank A/c	xxx
(opening balance)		(Bills receivable honoured)
To Sundry debtors A/c	xxx	By Sundry debtors A/c	xxx
(Bills receivable received during the year)		(Bills receivable dishonoured)
		By Balance c/d	xxx
		(closing balance)
	xxx		xxx

 

In the books of David 
Calculation of opening capital 
Statement of affairs as on 1^st April, 2018 Liabilities Rs Assets Rs Sundry creditors 1,05,000 Cash 43,000 Loan 25,000 Stock of goods 1,20,000 Capital (balancing figure) 4,00,000 Sundry debtors 84,000  Business premises 2,50,000  Furniture 33,000 5,30,000 5,30,000 Calculation of closing capital 
Statement of affairs as on 31^st March, 2019 Liabilities Rs Assets Rs Sundry creditors 1,02,000 Cash 29,000 Loan 20,000 Stock of goods 1,30,000 Capital (balancing figure) 4,42,000 Sundry debtors 1,10,000  Business premises 2,50,000  Furniture 45,000  5,64,000 5,64,000 Statement of affairs as on 31st March, 2019
ParticularsRs Closing capital as on 31.3.2019 4,42,000 Add: Drawings during the year (2,500 x 12) 30,000 4,72,000 Less: Additional capital introduced during the year 45,000 Adjusted closing capital 4,27,000 Less: Opening capital as on 1.4.2018 4,00,000 Profit made during the year ending 31.3.2019 27,000

Statement of affairs of Ganesh as on 31^st March, 2018

Liabilities	Rs	Assets	Rs
Creditors	9,000	Cash	5,000
Bills payable	6,000	Cash at bank	24,000
Capital (balancing figure)	88,000	Stock of goods	18,000
		Debtors	16,000
		Bills receivable	7,000
		Land and buildings	30,000
		Furniture	3,000
	1,03,000		1,03,000

In the books of Shanthi Statement of affairs as on
31^st December, 2018

Liabilities	Rs	Assets	Rs
Sundry creditors	25,000	Cash	4,000
Bills payable	4,000	Stock	45,000
Capital (balancing figure)	1,66,000	Debtors	70,000
		Bills receivable	6,000
		Machinery	60,000
		Furniture	10,000
	1,95,000		1,95,000

Statement of profit or loss for the year ended 31^st March, 2018

Particulars	Rs
Closing capital (as on 31.3.2018)	2,75,000 20,000
Add: Drawings during the year (balancing figure)
	2,95,000 30,000
Less: Additional capital introduced during the year
Adjusted closing capital	2,65,000 2,50,000
Less: Opening capital (as on 1.4.2017)
Profit made during the year	15,000

Statement of profit or loss for the year ended 31^st December, 2018

Particulars	Rs
Closing capital (as on 31.12.2018) (balancing figure)	35,000
Add: Drawings during the year (goods taken for personal us	5,000
	40,000
Less: Additional capital introduced during the year	2,500
Adjusted closing capital	37,500
Less: Opening capital (as on 1.1.2018)	27,500
Profit made during the year	10,000

Statement of profit or loss for the year ended 31st March, 2019

Particulars	Rs.
Closing capital (as on 31.3.2019)	1,90,000
Add: Drawings during the year	30,000
	2,20,000 50,000
Less: Additional capital introduced during the year
Adjusted closing capital	1,70,000 2,10,000
Less: Opening capital (as on 1.4.2018) (balancing figure)
Loss for the year ending 31.3.2019	(-) 40,000