You might have not learned or even heard about the accounting for incomplete records hence we are here to provide you complete knowledge regarding the concept and procedure that is followed by the different companies to maintain their incomplete records.
You should not become shock regarding this term as it is an alternative for the book-keeping single entry system, a business which is completely carried out for recording the business transaction only in a single entry system.
There are multiple examples for the organizations who maintain such procedure taking in to the account of a shopkeeper near to you home, he is also an accountant as he maintains his books of accounts though he may not be familiar with the techniques procedure and professional way for recording business transaction but hence he keep the records in the method of book keeping (a single entry system).
There are some main difference between the incomplete recording of business transaction and double entry book-keeping method which is discussed below:
1. In the double entry book-keeping the each business transaction is recorded in two sides one is debit and other is credit, in an transaction one side is debited and other is credited
2. Here in the incomplete record keeping system in the most of cases only a single aspect is determined either it would be a debit or credit no affect for that transaction is shown over here.
3. In the Double Entry System the five heads of accounts are kept in the mind and with the vision of those five heads business transactions are carried out such as assets, liabilities, capital and revenue and expenditure. The complete books of accounts are maintained.
4. In the incomplete book keeping there is no concept of recording the business transition regarding the five heads of accounts.
5. The Trail Balance in maintained in the double entry book-keeping system as to prepare the financial statements which is generally prepared at the end of fiscal year.
6. In the Single Entry book-keeping or incomplete record keeping it is not possible for the anybody to prepare or maintain the trail balance as the only one aspect on a transaction is carried out ignoring the effect of that transaction, hence there will be no financial statement prepared by such person.
7. Maintaining the complete books of accounts helps you to provide true, fair and accurate picture of the business, the financial position of the company can be judged with such maintenance.
8. No earning capacity or financial position can be ascertained by the single entry record keeping system.