Learning objectives

After you have studied this chapter, you

should be able to:
Explain the meaning of single entry and
incomplete records.
Deduce the figure of profits where only the
increase in capital and details of drawings
are known
Draw up a trading and profit and loss
account and balance sheet from records not
kept on a double entry system
Deduce the figure for cash drawings when
all other cash receipts and cash payments
are known
Deduce the figures of sales and purchases

Introduction
In this chapter, youll learn about single entry
and incomplete records.
You will learn how to use the accounting
equation to identify the profit for a period
when only the opening and closing capital
figures and drawings are known.
You will also learn how to find the figure for
cash drawings or the figure for cash expenses
when all other cash receipts and payments
are known.
You will learn how to find the figures for
purchases and sales from incomplete records.

Introduction(Cont..)

For every small shopkeeper, market stall, Internet cafe, or

other small business to keep its books using a full double
entry system would be ridiculous.
such firms would not know how to write up double entry
records, even if they wanted to. It is more likely that they
would enter details of a transaction once only, using a
single entry system. Many of them would fail to record
every transaction, resulting in incomplete records.
However, despite many small businesses not having any
need for accounting records, most do have to prepare
financial statements or, at least, calculate their sales or
profits once a year. How can these be calculated if the
bookkeeping records are inadequate or incomplete?

Definition Of Single Entry

Records of transactions exist but are
not recorded on double entry basis.
Usually made of cash paid and
received.

Definition of Incomplete
Records
Records of business transactions are
incomplete on inadequate.
Some documents or information
might be partially or wholly stole,
lost, misplaced, destroyed or the
owner simply failed to keep proper
records.

IDENTIFY PROFIT
Identifying profits when opening and closing capital are
known
Lets look at a business where capital at the end of 20X4 was 20,000. During 20X5
there have been no drawings, and no extra capital has been brought in by the owner.
At the end of 20X5 the capital was 30,000.
This year

Last year

Net profit = 30,000 20,000 = 10,000

If have
drawings

This
year

Profit

20,000 +

Drawings

This year
Capital

7,000

30,000

Profit = This Year Capital+ Drawings - this year capital

Identifying profits when you only have

a list of the opening and closing assets
and liabilities
Exhibit 35.1 H Taylor has not kept proper bookkeeping records, but she has
kept notes in diary form of the transactions of her business. She is able to
give you details of her assets and liabilities as at 31 December 20X5 and 31
December 20X6:
At 31 December 20X5
Assets: Van 6,000; Fixtures 1,800; Stock 3,000; Debtors 4,100; Bank
4,800; Cash 200. Liabilities: Creditors 1,200; Loan from J Ogden 3,500.
At 31 December 20X6
Assets: Van (after depreciation) 5,000; Fixtures (after depreciation) 1,600;
Stock 3,800; Debtors 6,200; Bank 7,500; Cash 300. Liabilities: Creditors
1,800; Loan from J Ogden 2,000. Drawings during 20X6 were 5,200.
You need to put all these figures into a format that will enable you to identify
the profit. Firstly, you need to draw up a Statement of Affairs as at 31
December 20X5. This is really just a balance sheet, but is the name normally
used when you are dealing with incomplete records.

H Taylor
Statement of Affairs as at 31
December 20X5
RM
Fixed assets
Van
Fixtures
TOTAL
Current assets
Stock
Debtors
Bank
Cash
Less Current liabilities
Creditors
Net current assets

Less: Long-term
liability
Loan from J Ogden
Net assets
Financed by:
CapitalNote 1

RM
6,000
1,800
7,800

3,000
4,100
4,800
200
12,100
( 1,200)
10,900
18,700
( 3,500)
15,200
15,200