1. Prepared by:
NAME: PN NURSHAMIMI BINTI SABLI
ROOM: L2 60
TEL NO: 09-460 2445 / 013 2226491
EMAIL: nurshamimi@pahang.uitm.edu.my
INCOMPLETE RECORDS &
SINGLE ENTRY (SOLE TRADER)

2. LEARNING OUTCOMES
 Differences between single entry and Incomplete records
 Identify the weaknesses of incomplete records.
 Determine profit using the comparison method and
analysis method.
 The use of mark-up and margin to ascertain profit or loss
 Prepare a statement of affairs.
 Preparation of the Financial Statements

3. INTRODUCTION
 Incomplete records normally happen to small businesses –
they have accounting records but do not maintain according
to double entry principles.
 This is known as single entry system and results to
incomplete records
 Incomplete records can happen due to:
 Keeping only certain books of accounts (eg. Cash book &
cheque butts) to record money received and paid
 Even if there is complete set of books, some of the records
may be lost, destroyed or misplaced

4. WEAKNESSES OF INCOMPLETE
RECORDS
1
• Profit or loss is difficult to be ascertained
when preparing the normal income
statement – insufficient info. on revenues
and expenses
2
• Difficult to determine current financial
position as a result of incomplete info. on
assets and liabilities

5. METHODS TO DETERMINE PROFITS
FROM INCOMPLETE RECORDS
COMPARISON METHOD ANALYSIS METHOD
•Quick method to determine ‘estimated’ profit
without preparing income statement
•Used when very limited or no records
available (only have estimates of assets &
liability balances)
•Profit/(losses)
= owner’s equity at the end – owner’s equity at
the beginning
•Increase in OE – profit; while decrease in OE
– losses
•To determine OE at the beginning and end of
the period:-
OE = ASSETS – LIABILITIES
•This is done by preparing Statement of
Affairs – equivalent to balance sheet / SOFP
•Used when info. Available consists of >
the estimates of assets and liability
balances.
•Details of cash receipts and payments
may be obtained through cash book but
not for sales, purchases, expenses and
revenues. Hence,
•Need to reconstruct ledger a/c to obtain
the missing info.
•Then, statement of comprehensive
income will be prepared in order to find
the net profit

6. COMPARISON METHOD –
STATEMENT OF AFFAIRS
 A statement showing an estimated assets and
liabilities of business at a particular date (2
statements – 1. for the beginning and 2. for end of
period)
 Owner’s equity will be the balancing figure between
the total assets and liabilities.
 After statement of affairs for both period have been
prepared, profit or loss for the period is ascertained by
preparing Statement of Profit or Loss (Income
Statement @ Statement of Comprehensive Income)

7. STATEMENT OF AFFAIRS
Statement of Affairs as at XXX
RM RM
ASSETS (Both NCA & CA)
Land xxx
Building xxx
Motor vehicle (on MV) xxx
Office Equipment (on MV) xxx
Cash / Bank xxx
A/c Receivable xxx
Prepaid Expenses xxx
Accrued revenues xxx xxx
LIABILITIES (Both NCL & CL)
A/c payable xxx
Accrued expenses xxx
Prepaid revenues xxx
Bank overdraft xxx
Bank loan xxx xxx
CAPITAL / OWNER’S EQUITY xxx

8. STATEMENT OF PROFIT OR LOSS
Mr A
Statement of Profit or Loss for the year ended XXX
RM
Owner’s equity at the end xx
Add: Drawings during the year (if any) xx
Less: Additional capital (if any) (xx)
Adjusted owner’s equity at the end xx
Less: Owner’s equity at the beginning (xx)
Net profit for the year xx
BASIC PRINCIPLE:
OE at the end = OE at the beginning +/- Profits/(losses) + Additional Capital -
Drawings

9. ANALYSIS METHOD –
RECONSTRUCTION OF LEDGER A/C
 Reconstruct:
 Trade receivables control a/c – to find credit sales &
payment received during the year
 Trade payables control a/c – to find credit purchases &
payment made during the year
 Cash book – to find closing balance, cash sales &
purchases, drawings etc.
 Expenses & revenue a/c – to find expenses incurred and
revenues earned for the year (both charged and
recognised in IS)
 Non current asset a/c – to find depreciation, acquisition
& disposal during the year

10. RECONSTRUCTION OF LEDGER A/C
Trade receivables control a/c
Bal b/d xx
*Ct sales xx
Bank xx
Disc allowed xx
Bad debts xx
R.Inwards xx
Bal c/d xx
Trade payables control a/c
Bank xx
Dis rcievd xx
R.Outward xx
Bal c/d xx
Bal b/d xx
*Ct purchases xx
Cash book
Bal b/d xx
*Cash sale xx
Sale of NCA xx
Income
Received xx
*Cash purchase xx
Trade payable xx
*Cash drawing xx
Expenses paid xx
Purchase of NCA xx
Bal c/d xx

11. RECONSTRUCTION OF LEDGER A/C
Expenses a/c
Prepayment b/d xx
Bank xx
Accrual c/d xx
Accrual b/d xx
*IS xx
Prepayment c/d xx
Revenues a/c
Accrual b/d xx
*IS xx
Prepayment c/d xx
Prepayment b/d xx
Bank xx
Accrual c/d xx
NCA a/c (MV/CV)
Bal b/d xx
Acquisition xx
*Depreciation xx
Bal c/d xx
*Expenses (IS) = prepaid b/d + bank + accrued c/d – prepaid c/d –
accrued b/d
*Revenues (IS)= prepaid b/d + bank + accrued c/d – prepaid c/d –
accrued b/d
*If given cost of the
assets, construct ledger as
usual in topic 3 especially
when there is disposal

12. PROFIT DETERMINATION:
MARGIN vs MARK-UP
 Helpful to find missing info. relating to sales & purchases
when there is > 1 missing info.
 MARGIN: gross profit expressed as a % of sales
 MARK-UP: gross profit expressed as a % of cost of sales
 If gross profit % is the MARGIN, then make SALES =
100%
 If gross profit % is the MARK-UP, then make COST OF
SALES = 100%
Margin = Gross profit / sales x 100%
Margin = Gross profit / cost of sales x 100%

13. PROFIT DETERMINATION:
MARGIN vs MARK-UP
 Eg. For MARGIN.
 A gross profit margin of 25% is made on sales. Cost
of sales = RM12,000. Compute gross profit and sales.
Sales (RM?) – Cost of Sales (RM12,000) = Gross Profit (RM?)
100% - 75% = 25%
Hence, Gross profit = RM12,000 / 75% x 25% = RM4,000
Sales = RM12,000 + RM4,000 = RM16,000

14. PROFIT DETERMINATION:
MARGIN vs MARK-UP
 Eg. For MARK-UP.
 A gross profit mark-up is 20%. Cost of sales =
RM10,000. Compute gross profit and sales.
Sales (RM?) – Cost of Sales (RM10,000) = Gross Profit (RM?)
120% - 100% = 20%
Hence, Gross profit = RM10,000 / 100% x 20% = RM2,000
Sales = RM10,000 + RM2,000 = RM12,000

15. FORMAT OF FINAL EXAM QUESTION
 Combination of both Comparison and Analysis
Method
 Preparation of:
1. Statement of Affairs
2. Statement of Comprehensive Income
3. Statement of financial position