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