Advanced Level Principles of Accounts --- Single Entry and Incomplete Records

( A ) Introduction
~~ The simple journals, ledgers and final account together with the rules for using them,
constitute an accounting system. The best system is that one that best achieves the
following objectives :
1. to process the accounting information efficiently i.e. at low cost
2. to obtain reports quickly
3. to ensure accuracy
4. to minimize the possibility of theft or fraud

However, many small sole traders, lack the time/expertise needed to perform their own
accounting system. They may only keep :
1. a bank statement
2. files of paid and unpaid bills

( B ) Meaning of single entry and incomplete record

1. Single entry : any system of accounting which does not use the two-fold aspect of it.
2. Incomplete record : any accounting system which records only part of the business
transactions

( C ) Incomplete Record Technique

Technique

Computation of profit Preparation of final accounts Computation of

* prepare a statement of
affairs
* establish opening balance sheet stock value
* prepare cash book * use accounting
* open ledger accounts ratios
* make the year end adjustments ( e.g. mark-up and
* prepare the trading and profit margin )
and loss account
* prepare the balance sheet

1. from opening balance sheet to find opening capital balance

2. to update the cash book with the bank statement to identify any errors
to identify any missing figures e.g. missing drawings or missing sales >>> misappropriated cash
3. to open total debtors / creditors accounts >>> credit sales / credit purchases
to open ledger accounts e.g. expense account >>> expense incurred / paid during this period
4. to provide depreciation for fixed assets
to provide for any stock written off, bad debts, prepaid expense etc
5. to compute the net profit
6. to prepare balance sheet