Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
Chapter 14
Incomplete Records
Mr. Kareem Abd Elbaset / 01060058582 Accounting – IGCSE – OL 59
Sometimes businesses, small business in particular, do not maintain a full set of accounting records.
This means that a trial balance cannot be drawn up and the financial statements cannot be prepared
until a certain amount of preparatory calculation have been carried out.
Advantage of maintaining double entry records:-
1) Full details are available about the assets, liabilities, revenues and expenses of the business.
2) The preparation of financial statements is relatively straightforward.
3) The calculation of the profit or loss for the year is likely to be reliable and accurate.
4) More informed decision-making is possible.
5) The possibility of fraud is reduces.
6) Comparisons with the result of pervious years and with other businesses are possible.
7) Information required by a bank or other lender is readily available.
Statement of affairs
A statement of affairs is a summary of the financial position of a business on a certain date. It is prepared
instead of a statement of financial position when double entry records have not been maintained.
The only way in which the profit can be measured is to compare the change in the capital over the financial
period. Capital increases when profit is made and Decreases when a loss is incurred.
Statement of Affairs
$ $ $
Cost Accumulated Net book
Depreciation value
Non-current assets
Premises xxx (xxx) xxx
Equipment xxx (xxx) xxx
Motor vehicles xxx (xxx) xxx
XXX
Current assets
Inventory xxx
Cash xxx
Bank xxx
Trade receivables xxx
Less provision for doubtful of debts (xxx) xxx
Other receivables xxx
Total Assets XXX
Capital and liabilities
Open Capital xxx
Add Capital introduced xxx
Add Profit xxx
Less Drawings (xxx)
= Closing Capital xxx
Non-current liabilities
Loan xxx
Current liabilities
Trade payables xxx
Other payables xxx
Bank overdraft xxx xxx
Total capital and liabilities XXX
Mr. Kareem Abd Elbaset / 01060058582 Accounting – IGCSE – OL 60
Dr - Capital account Cr +
Year 1 Drawings xxx Year 1 Balance b/d xxx
Dec 31 Dec 31
Bank ( Capital introduced ) xxx
Profit xxx
Balance c/d xxx
Year 2 Balance b/d xxx
Jan 1
Closing capital – Opening capital + Drawings – Capital introduced = Profit
Credit Sales
Dr + Trade Receivables account Cr -
Balance b/d xxx Bank xxx
Sales xxx Sales Returns xxx
Dishonoured cheque xxx Irrecoverable debts xxx
Interest xxx Discount Allowed xxx
Balance c/d xxx
Balance b/d xxx
Credit Purchase
Dr - Trade Payables account Cr +
Bank xxx Balance b/d xxx
Purchase Returns xxx Purchase xxx
Discount Received xxx Interest xxx
Balance c/d xxx
Balance b/d xxx
Mark-up
Sales Cost of sales x 1 mark-
mark-up % ) x 100
Cost of Sales
Mr. Kareem Abd Elbaset / 01060058582 Accounting – IGCSE – OL 61