Accounting·Other accounting statements · NSSCO 2.1

Financial statements from incomplete records

Narrated lesson · press play

Some small businesses never keep proper double-entry records, so figures go missing. In this lesson we become accounting detectives: we build a Statement of Affairs to find capital, compare capitals to find profit, use control accounts to recover credit sales and credit purchases, and use mark-up, margin and the rate of inventory turnover to fill the last gaps — then assemble a full Income Statement and Statement of Financial Position.

What you'll learn in this lesson

By the end you should be able to (NSSCO Accounting 2.1):

  • Explain the meaning of single entry and incomplete records
  • State the disadvantages of single entry and incomplete records as a method of bookkeeping
  • Prepare a Statement of Affairs at the beginning and the end of a period to calculate the capital (vertical format)
  • Calculate profit or loss by comparing the capital at the beginning and capital at the end of a financial period
  • Calculate credit purchases (draw up a creditors control account) and credit sales (draw up a debtors control account)
  • Apply mark-up, margin and rate of inventory turnover to arrive at missing figures
  • Calculate missing figures using various ledger accounts and the Cash Book
  • Prepare Income Statements and a Statement of Financial Position using all the information available (vertical format)
Loading your lesson…
You're watching a free 3-minute preview — create a free account to keep going.
Quick revision
Revise this in 5 minutes

Ms Pieters and Mike talk through the whole topic — with the figure and working drawn live.

Financial statements from incomplete records · NSSCO Accounting · namstudy