I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART F: PREPARING BASIC FINANCIAL STATEMENTS 

 

312

 

 

Incomplete records questions may test your ability to prepare accounts in the following situations. 

 – A 

trader 

does not maintain a ledger and therefore has no continuous double entry record of 

  transactions. 

 

 

– 

Accounting records are destroyed by accident, such as fire. 

 

– 

Some essential figure is unknown and must be calculated as a balancing figure. This may  

 

 

occur as a result of inventory being damaged or destroyed, or because of misappropriation  

  of 

assets. 

 

Two equations are very useful in incomplete records calculations. 

 

– 

The accounting equation: 

 

 

assets = capital + liabilities 

 – The 

business 

equation: 

 

  

closing net assets = opening net assets + capital introduced + profit – drawings 

 

Drawings often feature as the missing item in an incomplete records problem. The trader has been 

drawing money but does not know how much. 

 

The approach to incomplete records questions is to build up the information given so as to complete the 

necessary double entry. This may involve reconstructing control accounts for: 

 

– 

Cash and bank 

 

– 

Trade receivables and payables 

 

Where inventory, sales or purchases is the unknown figure it will be necessary to use information on