Accounts from incomplete records

1. Accounts from Incomplete
Records
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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.
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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
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8. CONVERSION METHOD

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
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