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Which of these is a limitation of incomplete records rather than merely a feature?
AThere is no uniformity across the firms
BIt suits small sole traders and firms
CA trial balance cannot easily be prepared
DPersonal and business dealings get mixed
Answer & Solution
Correct answer: C. A trial balance cannot easily be prepared
1. The textbook gives two separate lists, one of features and one of limitations, and they overlap in places.
2. The items unique to the features list are lack of uniformity, suitability for small concerns, and the mixing up of personal and business transactions.
3. The items unique to the limitations list are the difficulty of preparing a trial balance, the fact that errors and frauds cannot be detected easily, and unacceptability to government and other authorities.
4. Difficulty in preparing a trial balance therefore belongs to the limitations.
5. The reason given is that accounts are not maintained for all items, so arithmetical accuracy cannot be checked.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", §1.3 and §1.4_
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