Accounts from Incomplete Records
Accounts from Incomplete Records
This domain tests single entry or incomplete records, statement of affairs, computation of profit from capital changes, and missing figure calculations.
Core rules
- A statement of affairs lists assets and liabilities to find capital: Capital = Assets - Liabilities.
- Profit = Closing capital + Drawings - Additional capital - Opening capital.
- Missing sales can be found from total debtors account; missing purchases from total creditors account; cash drawings from cash book.
- Goods withdrawn by the proprietor for personal use are drawings at cost and reduce purchases or stock.
Worked example
Opening capital is Rs.1,00,000; closing capital Rs.1,40,000; drawings Rs.15,000; additional capital introduced Rs.10,000. Profit = Rs.1,40,000 + Rs.15,000 - Rs.10,000 - Rs.1,00,000 = Rs.45,000. Drawings are added back because they reduce closing capital; additional capital is deducted because it increases closing capital but is not profit. The statement of affairs is not a balance sheet prepared under double entry, but it balances assets against liabilities and capital.
Traps
Forgetting to add drawings; treating capital introduced as profit; valuing drawings of goods at selling price; and omitting depreciation or unpaid expenses when computing closing capital.