Under the conversion method of incomplete records, the accountant mainly reconstructs which set of accounts?
Correct answer: D. A complete set of double-entry accounts
- A. A cash budget for the period
- B. A bank reconciliation statement only
- C. A personal capital account only
- D. A complete set of double-entry accounts
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.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
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.
Practise Incomplete Records
34 free Incomplete Records MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Incomplete Records questions
If closing stock is omitted from the calculation of profit, what is the likely effect?
A trader has opening stock of Rs. 40,000, cash purchases of Rs. 160,000, credit purchases of Rs. 240,000, closing stock of Rs. 50,000, and sales of Rs. 500,000. What is the gross profit?
Goods costing Rs. 12,000 are withdrawn by the owner for personal use. What is the appropriate treatment in determining business profit?
What is the primary purpose of preparing a memorandum trading account under incomplete records?
A trader has cost of goods sold of Rs. 320,000 and applies a mark-up of 25% on cost. What are the sales?
The owner’s personal electricity bill of Rs. 9,000 is paid from business cash. How should this payment be treated?