Accounts from incomplete records
- 1. Accounts from Incomplete Records Contact: asand343@gmail.com
- 2. Why Incomplete Records? • High cost of record keeping • Lack of knowledge • Time • Lack of awareness for the need of financial records Found in Small Businesses and hence can be termed as Micro Business Accounting(MBA).
- 3. What are recorded? • Cash transactions • Credit transactions of revenue goods and capital goods in the personal accounts of Suppliers and Customers. • Double entry completed for cash receipts and payments on account of Customers and Suppliers. • Non recurring transactions like purchase of fixed assets, borrowings etc. Contact: asand343@gmail.com
- 4. Is there need to convert into double entry system? • No, if only approximate profit is to be determined. • Yes, if the results of operations and financial position are to be determined which is required – for filing Income Tax Returns; – to obtain loans from financial institutions; – to analyse the financial statements in a meaningful manner and understand for making rational decisions.
- 5. When no need to convert into double entry
- 6. Without converting How the approximate profit is determined? 1. Find out the amount of capital at the beginning of the year If it’s not given - Prepare statement of affairs for the beginning of the year. 2. Find out the amount of capital at the end of the year If it’s not given - Prepare statement of affairs for the end of the year. 3. Calculate the amount of profit or loss by preparing the following statement.
- 7. Statement of Profit Capital at the end of the year/ Closing capital XXX Add: Drawings XXX Less: Additional capital introduced XXX Less: Capital at the beginning of the year XXX Profit / loss for the year XXX Contact: asand343@gmail.com
- 9. Procedure for Conversion Determine all major items of incomes and expenses, as nominal accounts are not maintained.
- 10. How to find……? Items Accounts to be referred Credit Sales Accounts Receivables (Debtors, Bills Receivables) Cash Sales Cash and Bank Transactions Credit Purchases Accounts Payables (Creditors, Bills Payables) Cash Purchases Cash and Bank Transactions Other recurring expenses(Salary, Rent etc.) Cash and Bank Transactions, Information collected on Outstanding and Prepaid
- 11. What are the missing figures - FAQs • Credit sales • Collection from Customers • Opening and Closing Balances of Debtors • Bills Accepted • Cash Sales • Credit Purchases • Payment to Creditors • Opening and Closing Balances of Creditors • Acceptance given • Cash Purchases Contact: asand343@gmail.com