How to Efficiently Use AI to Solve Incomplete Records Questions in Financial Accounting

Using AI to solve incomplete records questions in financial accounting can help reconstruct
financial statements and ensure accuracy. Here’s a step-by-step guide on how to efficiently use
AI for this purpose:

1. Define the Objective

Clearly state what you aim to achieve with the incomplete records. This could be reconstructing
financial statements, calculating missing figures, or analyzing financial performance.

Example Prompt: "I need help reconstructing the income statement and balance sheet from
incomplete records."

2. Provide All Available Information

Supply the AI with all known data and details. This includes:

 Opening and closing balances

 Available transaction details (e.g., sales, purchases, expenses)

 Partial financial statements or account summaries

 Any relevant notes or assumptions

Example Prompt: "Given the following incomplete records, help me reconstruct the income
statement for the year ended December 31, 2023:

 Opening inventory: $10,000

 Closing inventory: $12,000

 Purchases: $50,000

 Sales: $80,000

 Expenses: $20,000

 Additional information: The gross profit margin is 30%."

3. Specify the Calculation or Reconstruction Method

Indicate the method or approach you want to use for reconstructing the records, such as using
control accounts, the accounting equation, or ratios.

Example Prompt: "Use the accounting equation to find the missing figure for owner's equity
given the following incomplete records:

 Total assets at year-end: $120,000

 Total liabilities at year-end: $50,000

 Owner’s equity at the beginning of the year: $60,000

 Net income for the year: $25,000

 Drawings: $15,000"

4. Ask for Step-by-Step Explanations

Request detailed steps to understand how the AI arrives at the solution. This will help you follow
the logic and verify the results.

Example Prompt: "Provide a step-by-step explanation to calculate the cost of goods sold
(COGS) and gross profit given incomplete records:

 Opening inventory: $5,000

 Closing inventory: $7,000

 Net purchases: $30,000

 Sales revenue: $50,000

 Gross profit margin: 40%"

5. Include Assumptions and Adjustments

If any assumptions or adjustments are required, clearly mention them in your prompt.

Example Prompt: "Assume that all sales are on credit and there are no returns. Help me
reconstruct the accounts receivable balance at year-end given:

 Opening accounts receivable: $15,000

  Total credit sales: $70,000

 Cash received from customers: $60,000

 Bad debts written off: $2,000"

6. Verify and Interpret the Results

Ensure the AI provides not only the numerical answers but also interpretations or implications of
the findings.

Example Prompt: "Calculate the missing figure for ending cash balance using the following
incomplete cash records and explain the result:

 Opening cash balance: $5,000

 Total cash receipts: $45,000

 Total cash payments: $35,000

 Cash balance from bank statement at year-end: $12,000

 Unpresented cheques: $2,000"

Sample Comprehensive Prompt

To illustrate an efficient use of AI, here’s a detailed prompt incorporating all the tips:

Prompt: "I need help reconstructing the balance sheet for XYZ Ltd. as of December 31, 2023,
using the following incomplete records:

 Opening balances: Cash $5,000, Accounts Receivable $15,000, Inventory $10,000,

Accounts Payable $8,000, Owner's Equity $22,000

 Transactions during the year: Cash sales $50,000, Credit sales $70,000, Purchases
$60,000, Expenses paid $30,000

 Closing balances: Accounts Receivable $20,000, Inventory $12,000, Accounts Payable

$10,000
  Additional information: No new equity was issued during the year. Calculate the closing
cash balance and prepare the reconstructed balance sheet, including all necessary
adjustments and assumptions."

Key Points to Remember

 Be clear and specific: Provide as much detail as possible to enable the AI to accurately
reconstruct the records.

 Ask for detailed steps: Ensure you get a step-by-step explanation to understand the
reconstruction process.

 Mention assumptions: Clearly state any assumptions or adjustments to avoid confusion.

 Verify results: Ensure the AI not only provides answers but also explains and interprets
the results.

By following these guidelines, you can efficiently use AI to solve incomplete records questions
in financial accounting, ensuring accurate and comprehensive solutions.