When a complete cash book is available but other records are incomplete, which item can be established directly from the cash book?
Correct answer: A. Cash balance
- A. Cash balance
- B. Credit sales
- C. Gross profit
- D. Closing inventory
Explanation
A complete cash book provides a record of cash receipts, cash payments, and the resulting cash balance. Credit sales, gross profit, and closing inventory require additional information or supporting records.
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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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More Incomplete Records questions
Opening creditors are Rs. 18,000, cash paid to suppliers is Rs. 60,000, returns outward are Rs. 4,000, and closing creditors are Rs. 24,000. What are the credit purchases?
Opening debtors are Rs. 20,000, cash received from debtors is Rs. 70,000, returns inward are Rs. 3,000, bad debts are Rs. 2,000, and closing debtors are Rs. 25,000. What are the credit sales?
A trader’s opening capital is Rs. 400,000, closing capital is Rs. 470,000, drawings are Rs. 60,000, and additional capital introduced is Rs. 20,000. What is the profit?
A trader’s capital increases from Rs. 300,000 to Rs. 360,000 during the year. The trader withdraws Rs. 50,000 and introduces additional capital of Rs. 20,000. What is the result for the year?
What is a major limitation of determining profit from incomplete records?
A trader receives Rs. 260,000 in cash during the year. This includes Rs. 190,000 from debtors, Rs. 25,000 from the sale of equipment, and Rs. 15,000 as a loan. What are the cash sales?