Understand What Is Incomplete Records: | |
|Incomplete records – is the term used for any system of bookkeeping which does not use full double entry.| | | |Generally applies to small business whether incorporated as Sole Proprietorship or Partnership. For them,| |generally a simple cash book to record receipts and payments may be enough instead of the proper | |accounting system complete with day books and ledgers. | |Using incomplete records cannot give an accurate Â period end financial statements as they do not tell | |the whole story. There is no record of outstanding debtors or creditors, nor of stock, nor, without | |analysis, of for what receipts and payments have been received and paid, or, in some cases, of the split | |between revenue and capital items. As a result, in an incomplete record system:- | |€the figures must be calculated, extrapolated, or extracted in the case of creditors and debtors | |to arrive at the year-end profit and loss account and balance sheet will rely heavily on application of | |the concept of the accounting equation which is AssetsÂ = Proprietors capital + liabilities. Thus the | |value of capital can be determined at any point in time. | |However, questions on Incomplete records are quite popular with examiners to test the understanding of | |candidates on Double Entry Methodology. | |Learn to master Incomplete Record By: | |Ensuring you have a SOUND knowledge of DOUBLE ENTRY for Sales (Cash & Credit),Purchase (Cash & Credit), | |Cash transactions for expenses & other cash received ( usually capital being introduced) | |2.Learn how to prepare: | |€an opening Statement of Affairs; | |main control accounts; | |Bank Account; | |calculating gross profit; | |draft the Profit and Loss Account; | |draft the Balance Sheet. | |Solving incomplete records problems is a matter of working through each of these steps tabulated below. | |If you use standard workings for each, and insert the figures which are given in the question, the | |problem becomes one of finding the missing figures. | |Steps To Follow Inc Completing Incomplete Records : | |complete the opening statement of affairs; | |set out the standard workings; | |insert the figures from the question; | |calculate the missing figures; | |draft the required accounting statements. | |Let’s consider each of the steps and the relevant workings. | |(1) Prepare Opening Statement Of Account | |When a Balance Sheet has to be prepared using estimated values,...
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