Under the conversion method of incomplete records, the accountant mainly reconstructs which set of accounts?
Correct answer: A. A complete set of double-entry accounts
- A. A complete set of double-entry accounts
- B. A bank reconciliation statement only
- C. A personal capital account only
- D. A cash budget for the period
Explanation
The conversion method converts available incomplete information into a complete double-entry framework. This permits preparation of trading, profit and loss, and balance sheet accounts. A bank reconciliation or cash budget alone cannot determine complete results.
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About Incomplete Records
Incomplete records require profit and financial position to be reconstructed when a complete double-entry system is unavailable. Methods include statements of affairs, capital comparisons, control accounts, cash summaries and margin calculations to find missing sales, purchases, expenses, assets, liabilities and drawings, while distinguishing business profit from changes in capital.
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