An incomplete record situation is whereby, the accounting system falls short of the double entry. This may be due to:

  • Lack of records at all; or
  • Insufficient records that will facilitate the preparation of final accounts.

Reasons for incomplete records:

  1. Managers or owners may not have the skills or expertise in preparing and maintaining an accounting system (records and procedures).
  2. It may not be economical for the business to maintain accounting records due to the volume or/and nature of transactions (small scale businesses)
  3. Records are destroyed (e.g. through fire), stolen or misplaced.

There are 4 main approaches in preparing final accounts where there are insufficient records.

  1. Estimating income from the net assets.
  2. Estimating income from the use of ratios.
  3. Use of a simple cashbook and bank statement.
  4. Use of control accounts.

N/B: approach number c and d are normally used together

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