Incomplete Records

(AS ACCOUNTS)
 What is incomplete records?
• System of bookkeeping which does not use full double entry (Single entry)
• Only a cash book is handled by businesses which uses single entry.
• You will be provided with Cash book and balances at the start and at the end
of a Financial year.
 Preparing Income statement
• STEP ONE: Calculating Sales
• Prepare Sales ledger control account and calculate the credit sales.
(You will get the opening and closing balances from the balances given. Receipts from
customers will be on the debit side of the bank account. If there is a return, discount, or a bad
debts it will be provided in the additional information)
• Remember: if trade receivables balances are given, you need to calculate the credit sales even if the bank
account says credit sales. The figure in the bank account is the receipts from trade receivables.

• Add cash sales banked + all the deduction to get the cash sales.
( Cash sales Banked will be given in the receipts side of the bank account. Additional
information will provide the deduction made from cash takings)
• STEP TWO: Calculating Purchases
• Calculate credit purchase using purchase ledger control Account.
(You will get the opening and closing balances from the balances given. Payment to suppliers will be on the credit
side of the bank account. If there is a return, or a discount, it will be provided in the additional information)
• Remember: if trade payables balances are given, you need to calculate the credit purchase even if the bank account says credit purchase. The
figure in the bank account is the payment to trade payables.
• Check whether there are any purchase of goods from cash takings. That is the cash purchases.

• STEP THREE: Calculating Expenses for the year

• Check the credit side of the bank account for expenses paid
• If any balance given for a particular account Use expenses account to calculate the amount to be forwarded to
the income statement.
• You can use also the following formula instead of an account:
• Income statement = Bank figure for that particular expense or income + prepaid b/d+ accrued c/d – prepaid c/d – Accrued b/d
• Check the cash taking deduction point to see whether there are any other expenses.
• STEP FOUR: Calculating Profit or loss on Disposal
• Check on the debit side of the cash book to see whether there is any receipts from disposal of
a NCA
• Read additional information on the disposal of NCA. If you are given the book value at the
date of disposal, no need to prepare a disposal account. The difference between the BV and the
cash received will give the profit or loss on disposal.
• If you are given the cost price of the disposed NCA and the depreciation policy, calculate the
Accumulate depreciation, and use a disposal account. (you can always use the difference of bv
and cash received)

• If no information is provided regarding the disposed NCA, assume that the NCA is being sold at its
book value.
• STEP FIVE: Calculating Depreciation of NCA
• If opening and closing balances are given use the revaluation method.
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 + 𝑛𝑒𝑤 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 − 𝑑𝑖𝑠𝑝𝑜𝑠𝑎𝑙 𝐵𝑉 − 𝐶𝑙𝑠𝑜𝑖𝑛𝑔 𝑏𝑎𝑙𝑎𝑛𝑐𝑒
• If only opening balance given, then depreciation policy will be provided.
• For straight line:
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = 𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑏𝑎𝑙𝑎𝑛𝑐𝑒(𝑐𝑜𝑠𝑡) + 𝑛𝑒𝑤 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 − 𝑑𝑖𝑠𝑝𝑜𝑠𝑎𝑙 𝑐𝑜𝑠𝑡 × % 𝑔𝑖𝑣𝑒𝑛

• For reducing balance method:

𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
= 𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑏𝑎𝑙𝑎𝑛𝑐𝑒(𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑣𝑎𝑙𝑢𝑒) + 𝑛𝑒𝑤 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 − 𝑑𝑖𝑠𝑝𝑜𝑠𝑎𝑙 𝐵𝑉 × % 𝑔𝑖𝑣𝑒𝑛
• STEP SIX : Calculating loan interest for the year
• Check the opening and closing value of loan amount. If both amount is same just take the % from
the value
• If the opening and closing value of loan is different check additional information. You will be
provided with the date of repayment or receipt of the loan. You need to use both values but the
proportion of the months of ownership need to be taken into account. Example:

• Additional loan is taken out on 1 April 2019

• Loan interest = 50000 ×10% ×3/12 + 60000 ×10% ×9/12.
• Loan value for the till 01 April (first 3 months)will be 50000. the remaining 9 months value of loan is
60000

• If the opening and the closing value is different and if you are not provided with any interest rate.
This will normally be in case of repayment of loan. Check the difference in the value. The decrease
in loan value is the repayment amount. Check the bank account for loan payment. Difference
between the loan payment amount and repayment amount is the loan interest.
 Preparing Statement of Financial Position
• Use the closing balances given except the capital. (In the statement of financial position u
need to include the opening capital. If not given calculate using assets – liabilities)
• For NCA where closing balance is not provided use the Formula
Closing balance = Opening balance (Carrying value)+additions-Disposal (BV)-Depreciation for the year
• Use PAPA ALLA for identifying whether an expense or an income is an asset or a liability.
• Compare the loan interest for the year and loan interest paid in the bank account to identify
loan interest owing.
(Incase of loan repayment identify the loan repayment amount and any payment in addition to the loan
repayment is considered to be the interest paid)