Incomplete records system
An incomplete records system is unscientific, incomplete, inaccurate and unsystematic. Explain
An incomplete records system, also known as a single entry system, is not a standard practice like a double-entry system based on the dual aspect concept.
The double-entry system is based on a scientific dual aspect concept that makes it possible to scientifically locate any error arising due to emission, omission or clerical mistake. Two sides of the trial balance will not tally if there is an error in the double-entry system.
However, there is no such advantage in using the single-entry or incomplete record system. These records are maintained by accounting novice people or small traders who are not officially required to maintain books of account.
Considering the above differences with the double-entry system, we can observe the following limitations of an incomplete record system:
- This system is inadequate and unscientific.
- Automatic checks and account reconciliation are not feasible.
- In non-trading entities, it is impossible to identify the exact surplus or deficit between income and expenses, and in commercial enterprises, the exact profit or loss.
- Due to the improper maintenance of asset and liability records, the true financial status may not be known.
- The system is unreliable; banks, tax officials, and others have no faith in it.
- As neither feature is recorded, it is easier to conduct fraud.
- Different periods’ trading performance and financial circumstances cannot be compared to arrive at business-advancing conclusions.