The following are the practical difficulties that are encountered by a trader due to incompleteness of accounting records:
(i) Unscientific: Absence of systematic recording of both aspects of a transaction under this, makes it unscientific.
(ii) No trial balance for arithmetical accuracy of accounts : Dual aspects of a transaction is not recorded under this system. As a result, trial balance cannot be prepared from the accounting records maintained. Hence, arithmetical accuracy of accounting records cannot be checked
(iii)True Profits cannot be known: Nominal accounts are not maintained and therefore, it is not possible to prepare trading and profit and loss account to calculate gross profit and net profit respectively. Although the amount of net profit is determinable but the absence of details of revenue, other income, expenses and losses affect sound decision making.
(iv) True financial position cannot be determined: As all the assets and liabilities and depreciation are not recorded, the Balance Sheet cannot be prepared and as a result the true financial position cannot be ascertained.
(v)Difficulty in planning and decision making : In the absence of reliable information about nominal and real accounts, effective planning and control over expenses, assets, etc. is not possible
(vi) Not recognised by tax-authorities : Accounts maintained based on this system are not accepted by sales-tax and income-tax authorities.
(vii) Inter firm comparison not possible : Due to the variation in accounting procedure and rules, comparison of two or more business is not possible