IGCSE ACCOUNTING 0452
Incomplete Records
What Are Incomplete Records?
Incomplete records refer to accounting situations where a business does not keep a full double-entry
bookkeeping system. This is common in small businesses or sole traders.
Advantages of maintaining double entry records
1 Full details are available about the assets, liabilities, revenues and expenses of
the business.
2 The preparation of financial statements is relatively straightforward.
3 The calculation of the profit or loss for the year is likely to be reliable and accurate.
4 More informed decision-making is possible.
5 A greater degree of control over business activities can be exercised.
6 The possibility of fraud is reduced.
7 Comparisons with the results of previous years and with other businesses are possible.
8 Detailed records are available for reference purposes.
9 Information required by a bank or other lender is readily available.
🔸 Disadvantages of Not Maintaining a Full Set of Accounting Records
1. Lack of Accuracy – Financial information may be incorrect or incomplete.
2. Difficulty in Calculating Profit or Loss – Without proper records, it's hard to know how much
the business has truly earned or spent.
3. Problems with Decision Making – Owners may make poor decisions due to unreliable data.
4. Inability to Detect Fraud or Errors – Missing entries make it easier for mistakes or fraud to go
unnoticed.
5. Difficulty in Obtaining Loans – Banks require reliable financial statements for loan approvals.
6. Tax Issues – Authorities need accurate records for assessing tax liabilities.
Statements of Affairs
(Opening and Closing)
What is a Statement of Affairs?
A simplified version of a statement of financial position
Shows the net assets (capital) of the business.
Format:
STATEMENT OF AFFAIRS AS AT………..
NON-CURRENT ASSETS COST ACC NBV
DEP
Premises xxxx xxxx xxxx
Machinery and Equipment xxxx xxxx xxxx
Motor Vehicles xxxx xxxx xxxx
xxx xxxx xxxxx
Add CURRENT ASSETS
Inventory XXX
Trade receivable XXX
Other Receivables XXX
Bank OR Cash XXX
XXXX
Total Assets xxxxx
EQUITY AND LIABILITIES
Capital (this is calculated as balancing figure) xxxx
ADD NON-CURRENT LIABILITIES
Loan
ADD CURRENT LIABILITIES
Trade payables
Other payables
Total equity and liabilities xxxxx
Opening Statement of Affairs – At the beginning of the accounting period.
OPENING CAPITAL=Assets-Liabilities
Closing Statement of Affairs – At the end of the period.
CLOSING CAPITAL=Opening Capital+Net Profit +Additional Capital- Drawings
NB This equation can be used when calculating Profit or Loss from Capital Changes
2. Calculating Figures from Incomplete Information
You may be asked to calculate:
Sales
Purchases
Gross Profit
Trade Receivables
Trade Payables
Expenses/ Income to be transferred to income statement
Cash Drawings/ Bank Balance
USEFUL HINTS:
1. CREDIT SALES: use sales ledger control account
2. CREDIT PURCHASES: use parchases ledger control account
3. GROSS PROFIT: use mark -up /margin relationship or the equation
Sales – Cost of Sales = Gross Profit
4. Cost of Sales: use mark -up /margin relationship or equation
Opening Inventory + Purchases – Closing Inventory = Cost of Sales
5. EXPENSES OR INCOME TO BE TRANSFERRED INTO THE INCOME STATEMENT AND
STATEMENT OF FINANCIAL POSITION---PREPARE AND BALANCE INCOME / EXPENSE
ACCOUNT
INCOME ACCOUNT
Date Details Amount Date Details Amount
2023 Owing b/d xxxx Jan 1 Prepaid c/d xxxx
Jan 1
Dec 31 Income statement xxxx Dec 31 Bank/Cash xxxx
31 Prepaid c/d xxxx 31 Owing c/d xxxx
xxxxx xxxxx
2024 Jan Owing b/d xxxx 2024 Jan Prepaid b/d xxxx
1 1
EXPENSE ACCOUNT
Date Details Amount Date Details Amount
2023 Jan Prepaid b/d xxxx 2023 Jan Owing c/d xxxx
1 1
Dec 31 Bank/ Cash xxxx Dec 31 Income Statement xxxx
31 owing c/d xxxx 31 Prepaid c/d xxxx
xxxxx xxxxx
2024 Prepaid b/d xxx 2024 Jan Owing b/d xxxx
Jan 1 1
CALCULATION OF BANK BALANCE/ DRAWINGS/CASH SALES
HINT: PREPARE AND BALANCE THE CASHBOOK TO CALCULATE ANY OF THE
ABOVE IF MISSING FROM THE PROVIDED INFORMATION
FINAL STAGE Preparing Financial Statements from Incomplete Records
🔸 Adjustments to Financial Statements ( Sole Traders)
Make typical end-of-year adjustments:
1. Depreciation of non-current assets
2. Accruals and Prepayments for expenses/revenue
3. Inventory Adjustments (opening/closing stock)
4. Provision for Doubtful Debts
5. Drawings (goods/cash taken by owner)
Use these ratios to estimate missing Sales, Cost of Sales, or Inventory figures.
COMPILED BY SIR ARTHUR 0771125884---"TAKING LEARNERS TO GREATER HEIGHTS”
