Incomplete Records (Cambridge (CIE) IGCSE Accounting)
Revision Note
Written by: Donna Simpson
Reviewed by: Dan Finlay
Incomplete Records
What are incomplete records?
Incomplete records are accounting records kept by businesses that do not keep a full set of records
This means the accounting principle of duality was not followed in the preparation of accounting transactions
A business might keep incomplete records for several reasons:
The owner lacks the technical skills to prepare the records
It is the usual practice of the business to make single entries
Some accounting information may have been lost, damaged or stolen
What are the disadvantages of not maintaining a full set of accounting records?
A trial balance cannot be prepared from incomplete records
Therefore the business is unable to use it as a way to verify the accuracy of the ledger accounts
The owner is unable to determine the financial position of the business
The owner is unable to assess if the business will continue to trade in the future
The owner is unable to make comparisons of its performance with previous years
It is very difficult to detect fraud in the business
Information is not readily available for banks and lenders
It is challenging to identify areas for development and to make decisions
How can I prepare financial statements using incomplete records?
You need to be able to use incomplete records to prepare:
An income statement
A statement of financial position
You will only be given incomplete records for sole traders
You can spot questions involving incomplete records by looking out for the following phrases
"...does not keep full accounting records..."
"...does not keep a full set of records ..."
"...does not keep proper books of account ..."
Identify which information is missing
Find the missing information using the following methods:
Preparing a statement of affairs
This is useful for finding the capital balance
Preparing the ledger accounts
These are useful for finding the cash and bank balances, expenses and income
Prepare the sales and purchases ledger control accounts
These are useful for finding credit sales, credit purchases, trade receivables and trade payables
Using mark-up, margin and inventory turnover
These are useful for finding sales, purchases, gross profit, inventory
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